Exhibit 10.42
MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT
(the "Agreement") is made as of this 30th day of January 2012 (the "Effective Date") by and among Fusion Telecommunications International, Inc. ("Fusion"), a corporation organized under the laws of the State of Delaware; NBS Acquisition Corp. ("Newco" and together with Fusion sometimes collectively hereinafter referred to as "Purchasers"), a corporation to be fanned under the laws of the State of Delaware as a wholly-owned subsidiary of Fusion; Network Billing Systems, LLC ("NBS" or the company"), a limited liability company organized under the laws of the State of New Jersey; Jonathan Kaufman ("Kaufman"), a resident of the State of New Jersey; and Christiana Trust as trustee of the LK Trust ("LK"), a Delaware Trust. Fusion, Newco, NBS. Kaufman and LK are sometimes hereinafter referred to individually as a "Party" or collectively as the "Parties."
WHEREAS,
NBS is a limited liability company organized and in good standing under the laws of the State of New Jersey; and
WHEREAS
, Kaufman and LK (the "Members) own all of the issued and outstanding membership interests in NBS (the "Interests") in the proportions set forth on Schedule A hereto; and
WHEREAS
, NBS is engaged in the business of providing telecommunications services (the "NBS Business"}, and, in connection therewith, utilizes certain assets of Interconnect Systems Group II, LLC ("ISG"}, a limited liability company organized under the laws of the State of New Jersey which is affiliated with NBS through common control (the NBS Business operated along with the assets of ISG being hereinafter collectively referred to as the "Business"); and
WHEREAS
, ISG is engaged in the business of providing back office support for telecommunications services; and
WHEREAS
, contemporaneous herewith, Purchasers are entering into an agreement (the "ISG Purchase Agreement") with ISG and its Members (collectively the "ISG Sellers") pursuant to which the Purchasers have agreed to purchase and the ISG Sellers have agreed to sell, the assets of ISG used in connection with the Business (the "ISG Assets"); and
WHEREAS
, the total purchase price to be paid by Purchasers for the Interests of the
Members and for the ISG Assets is twenty million dollars ($20,000,000): and
WHEREAS
, the Members desire to sell the Interests to Newco and Newco desires to purchase the Interests from the Members upon the terms and conditions hereinafter set forth.
NOW, THEREFORE
, In consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Certain Definitions
As used in this Agreement, the following terms shall have the following meanings, unless the context otherwise requires:
(a) "Agreement" or ''Purchase Agreement" shall mean this Membership Interest
Purchase and Sale Agreement, including all Exhibits and Schedules hereto.
(b) "Business" shall mean the business engaged in by NBS in conjunction with the assets of ISG, including the customer base associated with the Business as of the Closing Date.
(c) "Closing" shall mean the consummation of the transactions contemplated by this
Agreement (the "Transactions").
(d) "Closing Date" shall mean the date on which the Closing occurs pursuant to
Section 2.5 of this Agreement.
(e) "Contract" shall mean any note, bond, indenture, mortgage, deed of trust, lease, franchise, permit, authorization, license, contract, instrument, employee benefit plan or practice, ar other agreement, obligation, commitment, arrangement or concession of any nature
whatsoever, oral or written.
(f)
"Entity" shall mean an individual, a partnership, a corporation, a limited liability company, a trust, an unincorporated organization, an association, a joint venture, or other similar entity.
(g) "Fusion Material Adverse Effect" shall mean a Material Adverse Effect on Purchasers or a Material Adverse Effect on the ability of Purchasers to perform their obligations under, and to consummate the transactions contemplated by, this Agreement: it being acknowledged that any adverse effect of $50,000 or more on Purchasers shall in any event be deemed a Fusion Material Adverse Effect.
(h) "
GAAPK"
shall mean accounting principles generally accepted in the United States of America as in effect from time to time.
(i) "Governmental Entity'' shall mean any court, arbitrator, administrative or other governmental department, agency, commission, authority or Instrumentality, domestic or foreign.
(j) "Indebtedness" shall mean
, with respect to any Entity,
(i) every liability of such Entity
(excluding, in the case of a
consolidating Entity, Intercompany
accounts) for borrowed money,
for reimbursement of amounts drawn unde
r letters of credit, bankers'
acceptances or similar facilities issu
ed for the account of such
Entity, for notes issued or assumed
as the deferred purchase price
of property or services (excluding
accounts payable), for debts
relating to a capitalized lease obligation, for all debt attributable to
sale/leaseback transactions of such Entit
y; and (ii) every liability of
others of the kind described in the
preceding clause (i) that such
Entity has guaranteed or which Is otherw
ise a legal liability of
that Entity.
(k) "Intellectual Property" shall mean all domestic or foreign rights in, to and concerning: (i) inventions and discoveries (whether patented, patentable or unpatentable and whether or not reduced to practice), including ideas, research and techniques, technical designs, and specifications (written or otherwise), improvements, modifications, adaptations, and derivations there to, and patents, patent applications, inventor's certificates, and patent disclosures, together with divisions, continuations, continuations-in-part, revisions, reissuances and reexaminations thereof; (ii) trademarks, service marks, brand names, certification marks, collective marks, d/b/a's, trade dress, logos, symbols, trade names, as
sumed names, fictitious names, corporate names and other indications or indicia of origin, including
translations, adaptations, derivations, modifications, combinations and renewals thereof; (iii) published and unpublished works of authorship, whether copyrightable or not (including databases and other compilations of data or information), copyrights therein and thereto, moral rights, and rights equivalent thereto, including but not limited to, the rights of attribution, assignation and integrity; (iv) trade
secrets, confidential and/or
propr
ietary information, including Ideas, research
and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, schematics, designs, discoveries, drawings
, prototypes, specifications, hardware configurations,
c
ustomer and supplier lists, financial
information, pricing and cost information, financial projections, and business and marketing methods plans and proposals;(v) computer software, including programs, applications
, source and object code, data bases, data, models, algorithms, flowcharts, tables and documentation related to
the foregoing;
(vi) other similar tangible or intangible intellectual property or proprietary
rights, information and technology and copies and tangible embodiments thereof (in whatever form or medium); (vii) all applications to register, registrations, restorations, reversions and renewals or extensions of the foregoing; (viii) Internet domain names; and (ix) all the goodwill associated with each of the foregoing and symbolized thereby;(x) URL's; (xi) toll free numbers; and (xii) all other intellectual property or proprietary rights and claims or causes of action arising out of or related to any infringement, misappropriation or other violation of any of the foregoing, including rights to recover for past, present and future violations thereof.
(l) "Legal Proceeding" shall mean any private or governmental action, suit, complaint, arbitration, mediation, legal or administrative proceeding or investigation pending or threatened, whether prior to or post closing and whether or not a contingent liability, arising or accruing from actions or activities prior to the Closing Date.
(m) "
Lien" shall mean any security interest, mortgage, pledge,
hypothecation, charge, claim, option, right to acquire, adverse interest, assignment, deposit arrangement, encumbrance, restriction, lien (statutory or other), or preference, priority
or
other security agreement or preferential arrangement of any kind or nature whatsoever (including
any conditional sale or other title retention agreement, any financing lease involving substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction).
(n) "Material Adverse Effect" shall mean with respect to an Entity(ies), any circumstance, change or
effect that
is, or could reasonably be expected to
be, materially adverse to the
business, assets, liabilities,
obligations, financial condi
tion, results of operations or prospects of such Entity(ies) or which may adversely affect
a Party's realization
of the intended economic benefits of consummating the Transactions; It being acknowledged that any adverse effect of $50,000 or more shall in any event be deemed a Material Adverse Effect.
(o) "Business Material Adverse Effect" shall mean a Material Adverse Effect on the
Business of NBS and ISG, taken as a whole, or a Material Adverse Effect on the ability of NBS
and/or ISG to perform its obligations under, and to consummate the transactions contemplated by, this Agreement and the ISG Purchase Agreement, as the case may be.
(p) "Purchase Price" shall mean the consideration payable to the Members pursuant to Section 2.2 hereof.
(q) "Tax" or "Taxes" shall mean any and all domestic or foreign, federal, state, local or other taxes of any kind {together with any and all interest. penalties, additions to tax
and additional amounts imposed
wi
th respect thereto) Imposed by any
Governmental Entity, including taxes on or with respect to income, franchises, windfall or other profits, gross receipts, occupation, property, transfer, sales, use, capital stock, severance, alternative minimum, payroll, employment, unemployment, social security, workers' compensation or net worth, and taxes in the nature of excise, withholding, ad valorem, value added or other taxes, fees, duties, levies, customs, tariffs, imposts, assessments, obligations and charges of the same or a similar nature to any of the foregoing.
(r) "Tax Return" shall mean a report, return or other information required to be supplied to or flied with a Governmental Entity with respect to any Tax including an information return, claim for refund, amended Tax return or declaration of estimated Tax.
1.2
Terms Generally
The definitions set forth or referenced in Section 1.1, and elsewhere in the Agreement. shall apply equally to both the singular and plural forms of the terms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". To the "knowledge" of a person or Entity means the actual or constructive knowledge of such person or Entity, after due inquiry.
ARTICLE
II
PURCHASE AND SALE
2.1
Agreement
to
Sell
At the Closing, and except as otherwise specifically provided in this Agreement, Newco will purchase from the Members and the Members will validly and effectively grant, sell, convey, assign, transfer and deliver to Newco, upon and subject to the terms and conditions of this Agreement, all of the Members' right, title and interest in and to the Interests, free and clear of all Liens, including tax Liens, and will assume only those liabilities of NBS set forth described in
Section 2.3 (the "Liabilities")
.
2.2
Purchase
Price
and
Payment
The purchase price ("Purchase Price") to be paid to the Members by Purchasers for the Members' Interests to be acquired at Closing shall be equal to the difference between twenty million dollars ($20,000,000) and the purchase price for the ISG Assets under the ISG Purchase Agreement (the MISG Purchase Price"), subject to the provisions of Sections 2.4 and 2.5, below; provided that the allocation of the Purchase Price does not have a material adverse impact on Purchaser's results of operations or liquidity. The Purchase Price shall consist of:
(a) A payment, by wire transfer or certified check, in an amount equal to seventeen million seven hundred fifty thousand dollars ($17,750,000), less the ISG Purchase Price, payable to the Members at Closing in the proportion that the Members hold the Interests as set forth on Schedule A.
(b) Shares of Fusion common stock ("Fusion Stock") having a value of one million two hundred fifty thousand dollars ($1,250,000), issuable to the Members in the proportion that the Members hold the Interests as set forth on Schedule A. The number of shares of Fusion Stock shall be calculated and paid based upon the average closing price of the shares of Fusion Stock for fifteen (15) trading days immediately preceding the date of Closing.
(c) A note from Fusion to the Members (the "Members' Note"), payable to the Members in the proportion that the Members hold the Interests as set forth on Schedule A, in the amount of one million dollars ($1,000,000), payable in equal monthly Installments over a period of twenty four (24) months beginning in the third (3rd) month following Closing with interest at the rate of three percent (3%) per annum, calculated annually.
2
.
3
Liabilities
In connection with Purchaser’s acquisition of the Interests, Purchasers shall assume only the following liabilities of NBS (the "Liabilities"):
(a) All of the liabilities associated with the Business that were incurred in the normal course of the Business and pertain to any occurrence, action, inaction or transaction occurring prior to the Closing Date, to the extent that such liabilities are recor
ded or reserved against in the Audited Financial Statements (as hereinafter defined in Section 6.8), or if
incurred subsequent to the date of such Audited Financial Statements, in the boo
ks and records of NBS provided to Purchasers for review, or otherwise disclosed in writing to Purchasers prior
to Closing (the "Liabilities").
(b) Ongoing liabilities identified on
S
chedule 2.3(b), as may be updated
to and including the Closing Date, including, but not limited to, leases for office or equipment spaces, leases for equipment and software, Customer Agreements [as hereinafter defined, except that Customer Agreements evidenced by NBS' standard form of customer ag
reement need not be identified on Schedule 2.3(b)], Supplier Contracts (as
hereinafter defined), Maintenance Contracts (as hereinafter defined) and employment and agent agreements, all to the extent the Business is In good standing and current in all respect pursuant to such leases or ag
reements. When appropriate, liabilities shall be pro-rated as of Closing. Purchasers specifically acknowledge they will be assuming the
oblig
ation to pay on-going agent commissions
(exclusive of prepaid agent commission) as provided for in those agreeme
nts that are in good standing. To the extent that an updated Schedule 2.3(b) is delivered by Sellers and such updated schedule
includes liabilities that were not incurred In the ordinary course of the Business, at the election of Purchasers Sellers shall either cause such liability(ies) to
be satisfied at or prior to Closing, or take such other actions as may be necessary so that neither Purchasers nor NBS has any obligation therefor following the Closing.
(c) Notwithstanding the foregoing, there shall be excluded from the Liabilities any liabilities of NBS that arose prior to the Closing and were not incurred in the ordinary course of the Business, along with the liabilities identified and listed by the Parties in Schedule 2.3(c),all of which shall remain the responsibility of the Members. Such liabilities, if any, shall be referred to as the "Excluded liabilities." The Excluded Liabilities, which shall include accounts payable due to affiliates or the Members, shall be satisfied at or prior to Closing or otherwise modified such that neither NBS, the Business nor Purchasers shall have any obligation therefor following the Closing.
2.4
Hold Back and Escrow Account
Ten percent (10%) of the cash portion of the Purchase Price otherwise to be paid to the Members at Closing shall be withheld, in cash, at Closing and shall constitute a •hold back" (the "Hold Back") to be retained in escrow pursuant to the terms of an escrow agreement to be mutually agreed upon by the Purchasers and the Sellers, and entered Into on or prior to the Closing and shall be disbursed in accordance with the escrow agreement (a) to the Purchasers to offset (I) any damages to either or both of them caused by breaches of the representations, warranties and covenants made by any of the Sellers in this Purchase Agreement and/or any of the ISG Sellers under the ISG Purchase Agreement. and/or (ii) any liabilities of NBS or the Business not identified on Schedule 2.3(b) that (A) were not incurred in the normal course of the Business and pertain to any occurrence, action, inaction or transaction occurring prior to the Closing Date or (B) that were incurred in the normal course of the Business and pertain to any occurrence, action, inaction or transaction occurring prior to the Closing Date but were not recorded or reserved against on the Audited Financial Statements or in any other document or instrument furnished to the Purchasers by or on behalf of any of the Sellers in connection with this Agreement or any of the ISG Sellers under the ISG Purchase Agreement, or (b) to the Members in accordance with the escrow agreement to the extent not offset pursuant to clause
(a) of this Section. Pursuant to the escrow agreement, one-half of the escrow Hold Back, less any amount offset pursuant to clause (a), above, shal
l be disbursed from escrow to
the Members six months following the Closing Date and the balance of the Hold Back, less any amount
offset pursuant to clause (a)
, above, shall be disbursed to the Members one year following the Closing Date.
2.5
Other Provisions of the Purchase and Sale
(a) The Parties shall record as of the Closing and prepare a detailed schedule (the "AIR Schedule) showing each account comprising the total trade accounts receivable of NBS and ISG, including those accounts receivable that are no longer carried on the books and records of NBS or ISG but are still being pursued for collection (the •Business Receivables") and the total current liabilities of NBS and ISG, whether classified as "accounts payable," “accrued expenses" or otherwise on the books and records of NBS or ISG but exclusive of the Excluded Liabilities (the "Business Payables"). To the extent the Business Receivables exceed the Business Payables, the excess of the Business Receivables over the Business Payables (after excluding any litigation proceeds as described in Section 2.5(d) below) shall be paid to the Members, as their respective interests may appear; provided, however, that (i) the Closing Date calculation described above shall be made, and the AIR Schedule delivered, within fifteen (15) days following the Closing and (ii) only upon collection of Business Receivables in an amount sufficient
to pay all of the Business Payables, shall the
remaining Business Receivables collected by Purchasers be remitted to the Members. Such remittance shall be made on a monthly basis for a period of one (1) year from time of Closing, after which the Members shall no longer be entitled to receive Business Receivables collected by Purchasers. The Members sh
all have reasonable access to
the books and records of NBS relati
ng to the Business Receivables
during the one year period in order to review and monitor its right to receive payments pursuant to this provision. Any Business Receivables received from customers after Closing shal
l be applied to the customer's
oldest outstanding invoice. If for any reason the Business Payables exceed the Business Receivables, the excess of the Business Payables o
ver the Business Receivables shall be paid by the Members at or prior to the Closing
or otherwise reflected as a post-Closing adjustment to the Purchase Price in favor of Purchasers.
(b) NBS shall have a minimum of five hundred thousand dollars ($500,000) in cash on hand on the Closing Date for use as working capital. To the extent the cash on hand of NBS on the Closing Date exceeds this amount, the excess shall be reflected as an adjustment to the Purchase Price in favor of the Members at Closing.
(c) Prepaid sales agent commissions
in
the amounts listed in Schedule
2.5(c), as may be updated to and including the Closing Date, shall be reimbursed to the Members, as their respective interests may appear, at such time and to the extent such commission
s are earned by the respective sales
agents and, therefore, beco
me due and otherwise payable
to those sales agents had they not received the prepayment.
(d) A litigation settlement, as further described in Schedule
2.5(d), which, if received by the Purchasers or NBS following the Closing, shall be paid to the Members, as
their respective interests may appear.
2.6
Closing
The Closing shall take place at 10:00 a.m. (Eastern Time) at the offices of Fusion, 420
Lexington Avenue, Suite 1718, New York, New York 10170, on the fifth business day following the date on which Fusion provides NBS with written notice that the last of the conditions set forth in Article 8 is satisfied or, if permissible, waived In writing, or on such other date and at such other time or place as is mutually agreed by the Parties to this Agreement in writing.
2.7 Items to be Delivered at Closing
(a) At the Closing, and subject to the terms and conditions contained In this
Agreement, Sellers shall deliver to Purchasers the following:
(i) The Interests, duly endorsed for transfer to Newco, or if uncertificated, an Assignment of Membership Interests in form and substance reasonably satisfactory to Purchasers.
(ii) All, agreements, Contracts, customer prospect lists, commitments, leases, plans, bids, quotations, proposals, licenses, permits, authorizations, instruments, manuals and guidebooks, price books and price lists, customer and subscriber lists, supplier lists, sales records, files, correspondence, and other documents, books, records, papers, files and data belonging to NBS and used in the operation of the Business (“Business Records"). The Business Records shall be delivered in such form and media (e.g., written, electromagnetic, digital, etc.) as the Business Records are maintained by NBS in the ordinary course. Simultaneously with such delivery, all such steps will be taken as may be required to put Purchasers in actual possession and operating control of the Business.
(b) At the Closing, and subject to the terms and conditions contained in this
Agreement, Newco and Fusion shall deliver to the Members the following:
(i) The cash portion of the Purchase Price, less the Hold Back;
(ii) The Fusion Stock; and
(iii)
The Members' Note.
(c) In addition, each of the Parties shall deliver such other and further documents as may be required pursuant to the terms of this Agreement to consummate the Transactions, including without limitation, the escrow agreement contemplated by Section 2.4, below, the Membership Interest Assignment Agreement contemplated by Section 2.7(a)(i), above, and the employment agreement with Kaufman contemplated by Section 6.5, below.
2.8 Assets Included.
The assets of NBS to be acquired by Purchasers In connection with Purchasers' acquisition of the Interests shall include the following scheduled items:
(a) All items of personal property, including, but not limited to, office furniture, office equipment, office supplies, and other tangible personal property related to the administration of the Business as is, where is and as set forth on Schedule 2.8(a).
(b) All items of switching equipment, networking equipment, and customer premise equipment as is, where is and as set forth on Schedule 2.8{b).
(c) All items of computer equipment, related peripherals, and software licenses (as are assignable) related thereto as is, where is and as set forth on Schedule 2.8(c).
(d) All rights under any written or oral Contract, lease, agreement, plan, instrument, registration, license, certificate of occupancy, other permit, certification, authorization or approval of any nature, or other document, commitment, arrangement, undertaking, practice or authorization set forth on Schedule 2.8(d).
(e) All licenses, permits, and authorizations (collectively, "Licenses and Permits"), subject to Fusion qualifying for all of said Licenses and Permits, listed on Schedule 2.8(e).
(f) All Intellectual Property, as previously defined, whether registered or unregistered, and any applications therefor utilized by or in any way associated with the Business or the products and services offered by the Business, as set forth on Schedule 2.8(f).
(g) All Business Records, Including without limitation all records, manuals and other documents relating to or used in connection with the Business. If there Is a claim made, the Company shall have the reasonable right of access to the Business Records post-closing for the period of the applicable statute of limitations.
(h) The customer base and all customer information, files. records, data, plans and recorded knowledge, including customer records, customer contracts, customer lists and prospect lists forth on Schedule 2. (h), as may be updated to and including the Closing Date, as well as all customer agreements and contracts associated with the foregoing ("Customer Agreements''),except that customer agreements evidenced by NBS' standard form of customer agreement need not be identified on Schedule 2.8(h).
(i) The supplier lists and contracts with suppliers set forth on Schedule 2.8(i) ("Supplier Contracts),as may be updated to and including the Closing Date.
(j) The maintenance and service contracts ("Maintenance Contracts) as are assignable, set forth in Schedule 2.8(j). (k) All other assets of the NBS Business that are related to the day-to-day operation of the Business, except for those excluded under Section 2.3.
ARTICLE Ill
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
Each of the Members, severally and not jointly, represents and warrants to each of the
Purchasers as follows:
3.1 Information About Member
Member is an "accredited investor," as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933,as amended (the ·Securities Act"), Is experienced in investments and business matters, has made investments of a speculative nature and,
with its representatives, has such knowledge
and experien
ce
in financial, tax and other business matters as to enable it to utilize the Information made available by Purchasers to evaluate the merits and risks of and to make an informed investment decision with respect to this Agreement and the Member's acquisition of the Fusion Stock, which represents a speculative investment. Member is able to bear the risk of such investment for an indefinite period and has no current need for liquidity of its investment in the Fusion Stock.
3.2 Investment Intent
Member understands that the Fusion Stock has not been registered under the Securities Act, and may not be sold, assigned, pledged, transferred or otherwise disposed of unless the Fusion Stock is registered under the Securities Act or an exemption from registration, including
under Rule 144, is available.
Except as provided elsewhere herein, Member understands that Fusion has not undertaken to register the Fusion Stock. Member represents and warrants that it is acquiring the Fusion Stock for its own account, for investment, and
not with a view to the sale or distribution of the Fusion Stock except in compliance with the Securities Act and other applicable laws.
Each certificate representing shares of Fusion Stock will bear the following or substantially similar legend thereon:
"The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended or any state securities laws. The shares have been acquired
for Investment and may not be sold or transferred in the absence of an effect
ive Registration Statement for the shares under such Act unless, in the opinion of counsel satisfactory to the issuer, registration
is not required under such Act or any applicable state securities laws:
3.3 Ownership of Interests
Member is the sole record and beneficial owner of the Interests attributed to Member on Schedule A, all of which are owned free and clear of all Liens, and have not been sold, pledged, assigned or otherwise transferred exce
pt pursuant to this Agreement.
There are no outstanding subscriptions, rights, options, warrants or other agreements obligating Member to sell or transfer to any person other than Purchasers any or all of the Interests owned by Member, o
r any interest
therein. Upon consummati
on of the Transactions, Newco
will acquire good and marketable title to Member's Interests, free and clear of all Liens.
3.4 Authority, No Third Party Consents
Member has the full power and
autho
rity to enter into this Agreement and
the Transactions and to carry out its obligat
ions hereunder and thereunder.
This Agreement has been duly executed by Member and constitutes the valid and binding obligation of Member, enforceable against Member in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors' rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (c) to the extent the Indemnification provisions contained herein may be limited by applicable federal or state securities laws.
3.5 No Approvals or Notices Required; No Conflict with Instruments
The execution, delivery and performance of this Agreement and the Transactions by Member will not contravene or violate (a) any existing law, rule or regulation to which Member is subject, (b) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to Member, or (c) the organization documents of Member if it is an Entity; nor will such execution, delivery or performance violate, be in conflict with or result in the breach (with or without the giving of notice or lapse of time, or both) of any term, condition or provision of, or require the consent of any other party to, any mortgage, indenture, agreement, contract, commitment, lease, plan or other instrument, document or understanding, oral or written, to which Member is a party or by which Member is otherwise bound. No authorization, approval or consent, and no registration or filing with, any governmental or regulatory official, body or authority Is required in connection with the execution, delivery and performance of this Agreement by Member.
3.6 Access to Information
Member has been advised that Fusion files quarterly, annual and current reports with the Securities and Exchange Commission ("SEC") and that copies of such repo
rts, including the SEC Reports
(a
s hereinafter defined), may be examined at the web site of the
SEC at www.sec.gov. In addition, Member has been advised that at any time prior to Closing, Member shall have the opportunity to ask questions of and receive answers from Fusion's officers and directors necessary to evaluate Fusion and the issuance of the Fusion Stock hereunder, and to receive such additional information as Member may request for such purposes as Fusion can obtain without unreasonable effort or expense.
3.7 Representations and Warranties of Sellers
The representations and warranties of Sellers set forth in Article IV of this Agreement are true and correct as of the date hereof and as of the Closing.
REPRESENTATIONS AND WARRANTIES OF SELLERS
NBS, Kaufman
and LK (individually, a "Seller" and collectively, the "Sel
lers"), jointly and severally,
hereby
represent and warrant to the Purchasers, jointly
and severally, on the date hereof and on the Closing Date as follows:
4.1
Organization and Qualification
Each
Seller that
is an Entity (a) is duly formed, validly existing and in
go
od
standing unde
r the laws of its jurisdiction
of format
ion. NBS (a) has all requisite power and authority
to own, lease and operate its propertie
s and to carry on its business
as it is now being condu
cted and (b) is duly qualified
or licensed to do business and is In good standing in each jurisd
iction in which the properties
owned, leased or operated by it or the nature of its activ
ities makes such qualification necessary except where the failure to so register would not have
a Business Material Adverse Effect.
4.2
Authorization and Validity of Agreement
Each of the Sellers has all requisite power and authority to en
ter into this Agreement and to perform its obligations hereunder and to consummate the
Transactions.
Th
e execution, delivery
and performance by each of
the Sellers of this Agreement and the consummation
by each of the Se
llers of the Transactions have
be
en duly and validly authorized
by all necessary actions on the part of the Sellers and/or its member
s.
This Agreement has be
en duly executed and delivered
by each of the Sellers, and is a legal
, valid and binding obligation
of each of th
e Sellers, enforceable against each of them in accordance
with its terms, except (a) as limited by applicable ba
nkruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors' rights generally, (b) as limited by laws relating to the availability of specific performance, injunct
ive relief, or other equitable
remedies, or (c) to the extent
the indemnification provisions contained
herei
n may be limited by applicable
federal or state securities laws.
4.3
Sole Owners
Kaufman and LK are the sole record and beneficial owners of NBS. Other than Purchasers and Sellers, there are no other beneficiaries, third party or otherwise, to
this Agreement or to the transactions described in this Agreement.
4.4
Financial Statements; Books and Records; Controls and Procedures
NBS has delivered to Fusion copies of the unaudited combined balance sheets
of the Busi
ness (NBS and ISG) at December 31, 2009, December
31, 2010 and November 30, 2011, as well as the unaudited income statements for the years ended December 31,2009 and 2010,
and the period ended November
30, 2011 (collecti
vely the ·unaudited Financial Statements ). The Unaudited
Financial Statements have been prepared In accor
dance
with past practice
s and GAAP, and such Unaudited
Financial
Statements are true, correct
and complete, and present fairly and accurately the financial condition and position of NBS, ISG and the Business as of the dates indicated. NBS and ISG maintain books and records sufficient to permit the prepar
ation of accurate and complete financial statements
for NBS, ISG and the Busines
s; and the Unaudited Financial Statements have been prepared from the books and records of NBS,
ISG and the Business. NBS and ISG maintain controls and procedures that are sufficient to enable accurate and complete financial statements to be prepared from such books and records. Sellers have no reason to believe that the Unaudited Financial Statements cannot be audited in accordance with GAAP and the rules and regulations of the SEC.
4.5
Absence of Undisclosed Liabilities
Except as set forth in Schedule 4.5 or (a) as reflected or reserved against In Unaudited Financial Statements and (b) for liabilities and obligations incurred since the date of the most recent balance sheet included in the Unaudited Financial Statements in t
he ordinary course of business consistent with past practice, NBS has no liabilities or obligations of any
nature, whether or not accrued, absolute, contingent or otherwise, that would be required by GAAP to be reflected on a consolidated balance sheet of NBS (or in the notes thereto) other than th
ose which would not reasonably
be
expected to have, individually
or in the aggregate
, a Business Material Adverse Effect. There is no existing condition, situation or set of circumstances (excluding possible changes in the Tax laws of any jurisdiction) that could reasonably be expected to result
in any such liab
ility, other than liabilities fully and adequately
reflected or reserved against on the Unaudited Financial Statements, or incurred since the date of the most recent balance sheet included in the Unaudited Financial Statements in the ordinary course of b
usiness consistent
with past pr
actice, which in the aggregate
are not material to NBS o
r the Business. For purposes
of this Sect
ion 4.5, "material" shall mean any amount in excess
of $10,000.
4.6
No Material Adverse Change
Since the date of
the Unaudited
Fi
nancial Statements, there have been no material changes in the assets, properties, business, operations, prospects or condition (financial or otherwise) of NBS or the Business that could reasonably be foreseen to have a
Business Material Adverse Effect, nor do any of the Sellers know of any such change that is reaso
nably likely to occur, nor has
ther
e been any damage, destruction
or loss mate
rially and adversely affecting the assets, properties, business,
operations,
prospects or condition of NBS
or the Business, whether or not covered by insurance.
4.7
Accounts and Notes Receivable
All accounts and notes receivable reflected in the
Unaudited Financial Statements
and all accounts receivable arising after the date of the most
recent balance sheet included
in the Unaudited Financial Statem
ents (collectively, the "Post Balance
Sheet Accounts Receivable") have arisen In the ordinary course of business,
represent
valid and enforceable obligations due to NBS or the Business, and are not subject to any disco
unt, set-off or counter-claim. All such Post Balance Sheet Accounts Receivable have been collected or, to the best knowledge of Sellers, are fully collectible in the ordinary course of
busine
ss in the aggregate
recorded amounts thereof, except as reserved in the most recent balance sheet Included in the Unaudited Financial Statements.
4.8
Tax Matters
(a) NB
S has timely filed or caused to be filed (taking into account any extension of time within which to file) since its inception all material Tax Returns required to have been filed by it and all such Tax Returns a
re true, correct and complete.
NBS has paid all Taxes that have or may have become due pursuant to those Tax Returns or otherwise or pursuant to any assessment received by NBS.
(b)
For federal and state Income tax purposes, NBS is an LLC whic
h is treated as a partnership, and its income or loss is included in the income tax returns of
the Members, according to their respective interests. The United States federal and state income tax returns of the Members have never been audited by the IRS or relevant state tax authorities, insofar as they include income or loss attributed to NBS, nor are they the subject of any pending audit.
(c)
A
ll
material amounts of Taxes that NBS is required by l
aw to withhold or collect have been duly withheld or collected, and have been timely paid over to the
proper governmental authorities to the extent due and payable.
(d) NBS has not been delinquent in the payment
of any
material Tax that has not been accrued for In the Unaudited Financial Statements for the period for which such Tax relates nor is there any
material Tax deficiency outstanding, prop
osed, or assessed
against NBS or the Business, nor has NBS executed any unexpired waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.
(e) NBS has not incurred any liability for Taxes
since the date of the most recent balance sheet included in the Unaudited Financial Statements other than in the ordinary course of business consistent with past practice.
(f) NBS has not received written notice from any Governmental Entity that
a deficiency, delinquency, claim, audit, suit, proceeding, request for information or investigation is now pending, outstanding or, to the knowledge of any Seller, threatened against or with respect t
o NBS, the Business or Taxes.
There are no Liens for Taxes on any of the assets of NBS. Within the preceding four years, no claim has been made in writing by a Governmental Entity of a jurisdiction where NBS has not filed Tax Returns that NBS is or may be subject to taxation by that jurisdiction.
(g)
NBS (i) is not a party to or bound by any Tax allocation, indemnification, sharing or similar agreement or owes any a
mount under any such agreement
or ar
rangement (excluding customary agreements to indemnify lenders in respect of Taxes
an
d customary
indemnity provisions in agreements for the acquisition or divestiture of assets) or (ii)
is or could be liable for any Tax of any person under Section 1.1502-6 of the Treasury regulations
promulgated under the Internal Revenue Code of 1986, as amended (the “Code") (or any similar provision of state, local or foreign Law) by virtue of membership in any affiliated, consolidated, combined or unitary group (other than a group the common parent of which was Parent), or as a transferee or successor, or by contract.
(h)
NBS (i) has not filed any extension of time within which to file any Tax Returns that have not been filed (except for extensions of time to file Tax Returns other than income Tax Returns or gross receipts Tax Returns, which extensions were obtained in the ordinary course), (ii) has not granted any power of attorney that is in force with respect
to any matters relating to any Taxes, (iii) has not proposed to enter into an agreement relating to Taxes
with
a Governmental Entity, which proposals pending or (iv) has not, since
December 31, 2007, been issued any private letter
rulin
g, technical advice memorandum or other similar agreement
or ruling from a Governmental Entity with respect to Taxes.
4.9
No Approvals
or
Notices Required; No Conflict
with Instruments
The execution, delivery and performance of this Agreement and the Transactions by any of the Sellers will not contravene or violate (a) any existing law, rule or regulation to which any of the Sellers are subject, (b) any judgment. order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to any of the Sellers, or (c) the Certificate of Organization or Bylaws of the Company; nor will such execution, delivery or performance violate, be in conflict with or result in the breach (with or without the giving of notice or lapse of time, or both) of any term, conditi
on or provision of, or require the
cons
ent of any other party to, any
mortgage, indenture, agreement, contract, commitment, lease, plan or other instrument, document or understanding, oral or written, to which the Company is a party or by which the Company is otherwise bound. Except as set forth on Schedule 4.9, no authorization, approval or consent, and no registration or
filing with, any governmental or regulatory official, body or authority is required in connection with
the execution, delivery and performance of this Agreement by any of the Sellers.
4.10 legal Proceedings
Except as set forth in Schedule 4.10, there is no (a) Legal Proceeding pending, or to the knowledge of any Seller threatened, against, involving or affecting any
of the Sellers or any of their
res
pective assets or rights;
(b)
judgment, decree, Injunction, rule, or order of
any Gov
ernmental Entity applicable to
the that ha
s had or is reasonably likely to have, either individually or in the aggregate, a
Business Material Adverse Effect; (c) Legal Proceeding pending or threatened, against any of the Sellers that seeks to restrain, enjoin or delay the consummation of this Agreement or any of the other Transactions or that seeks damages in connection therewith; or (d) Injunction, of any type. For the avoidan
ce of any doubt, Fusion, Newco
and each of their res
pective shareholders, board of
directors, officers, employee
s, agents or attorneys (each an “
Indemnified Party"), are hereby indemnified by each of the Sellers from and against any and all claims, liabilities, obligations, costs and attorneys' fees and held harmless In the event of the inaccuracy of the representation and warranty contained I
n this Section. This provision i
s in addition to any other remedy available to Purchasers and shall survive Closing for a period of two (2) years.
4.11
licenses; Compliance with Regulatory Requirements.
(a)
NBS and the Business are and have been in compliance with, and not in default under or in violation of, any applicable federal, state, local or foreign law, statu
te, ordinance, rule, regulation,
judgment, order, injunctio
n, decree or agency requirement
of any Governmental Entity (collectively,
“
Laws" and each, a
“
Law"), except where such non-compliance, default or violation would not reasonably be expected to have, individually or in the aggregate, a Bus
iness Material Adverse Effect.
Within the past three years, NBS has not rece
ived any written notice or, to the knowledge of any Seller, other communication from any
Governmental Entity regarding any actual or possible violation of, or failure to comply with, any Law,
exce
pt as would not reasonably be
expect
ed to have, individually or in the aggregate, a
Business Material Adverse Effect.
(b) Except as set forth on Schedule 4.11(b), NBS and the Business are
in possession of all franchises, grants, authorizations, licenses, permits, eas
ements, variances, exceptions, consents, certificates, approvals, clearances, permissions,
qualifications
and registrations and orders of any Governmental Entity, and all rights under any material contract with any Governmental Entity, necessary for NBS to own, lease and operate its properties and assets or to carry on its Business as it is now being conducted (the UN
BS Permits"), except where the failure to have any NBS Permits would not reasonably
be expected to have, individually or in the aggregate, a Bus
iness Material Adverse Effect.
All NBS Permits are valid and in full force and effect, except where the failure to be in full force a
nd effect would not reasonably
be expected to have, individually or in the aggregate, a Bus
iness Material Adverse Effect.
NBS and the Business are in compliance in all respects with the terms and requirements of suc
h NBS Permits, except where the failure to be in compliance would not reasonably
be expected to have, individually or in the aggregate, a Business Material Adverse Effect.
4.12 Brokers or Finders
Other than Jerry Salvi, no agent. broker, in
vestment
banker, financial advisor or other entity is, will, or might be entitled, by reason of any agreement, act or statement by any of the Sellers, or any of their respective officers, employees, consultants or agents, to any financial advisory, broker
's, finder's
or similar fee o
r commission, to reimbursement
of
expenses or to Indemnification or contribution in connection with any of the Transactions, and each of
the Sellers agrees to pay all financial advisory, broker's, finder's or similar fee or commission owed to Jerry Salvi upon Closing, and to indemnify and hold each of the Purchasers harmless from and against any and all claims, liabilities or obligations with respect to any fees, commissions, expenses or claims for indemnification or contribution asserted by any person or Entity on the basis of any act or statement made or alleged to have been made by any of the Sellers or any of their respective officers, employees, consultants or agents.
4.13
Employment Agreements
There are no written employment agreements covering any employee(s) of
the Business.
4.14
Background of Kaufman
There are no civil, criminal, or regulatory infirmities or disqualifications in
the backgrounds o
f Kaufman and/or Russell Markman that would require public disclosure
in Fusion's filings with, and in accordance with the rules and regulations of, the SEC applicable to public disclosure relating to officers and/or directors of public companies.
4.15
Leasehold Interests
(a)
NBS does not own any real property.
(b) Except as would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect, (i) each material lease and
sublease (collectively, the "Company Real Property Leases") under which NBS or the Business uses or occupies or has the right to use or occupy any material real property (the "Company Leased Real Property") at which the material operations of NBS or the Business are co
nducted as of the date hereof,
is valid, binding and in full force and effect, (ii) neither NBS nor the Business is currently subleasing, l
icensing or otherwise granting
any person the right to us
e or occupy a material portion of a Company Leased Real Property that would reasonably be expected
to materiall
y and adversely
affect the existing use of the Company Leased Real Property by the Company in the operation of its business in the ordinary course thereon and (iii) NBS has not received written notice of any uncured default of a material nature on the part of NBS or the Business or, to the knowledge of Sellers, the landlord thereunder, with respect to any Company Real Propert
y lease, and to the knowledge
of Sellers no event has occurred or circumstance exists which, with the giving of notice, the passage of time, or both, would constitute a material breach or default under a Company Real Property lease. Except as would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect, NBS has a good and valid leasehold Interest, subject to the terms of the Company Real Property Leases, in each parcel of Company Leased Real Property, free and clear of all Liens, encroachments, easements, rights-of-way, restrictions and other encumbrances that do not materially and adversely affect the existing use of the real property subject thereto by the owner (or lessee to the extent a leased property) thereof In the operation of its business in the ordinary course. As of the date hereof and the Closing Date, neither NBS nor the Business has received written notice of any pending, and, to the know
ledge of the Sellers, there is
no threatened, condemnation proceeding with respect to any Company Leased Real Property, except such proceeding which would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect.
4.16
Title to Assets; Liens
Except as set forth on Schedule 4.16, NBS and/or ISG has good, valid and marketable title to the assets used in the Business, free and clear of all Liens. There are no developments, pending or threatened, affecting any of the assets of NBS that might materially detract from their value, materially Interfere with any present or intended use of such assets and/or impair the value of the Transactions to Purchasers.
4.17
Employees
Set forth on Schedule 4.17, as may be updated to and including the Closing Date, is a complete list of the employees
of the Business. Except as set
forth In Sche
dule 4.17, the Business is not
delinquent In payments to any
of its employees
for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them to the date hereof, or for amounts reimbursable to such employees.
4.18
Membership Interests
NBS is authorized to Issue membership interests in the amount currently issued and outstanding. The issued and outstanding membership interests in NBS have been duly and validly authorized and issued and are fully paid and non-assessable and were not issued In violation of the preemptive or similar rights of any person. There are no options, warrants or other securities exercisable or convertible into membership interests of NBS and NBS has not entered into any agreement or understanding to do so.
4.19 Employee Benefit Plans
(a)
Schedule 4.19 lists all material compensation or employee benefit
plans, programs, policies, agre
ements, arrangements, or other “employee benefit plans"
(within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA"), as well as all other arrangements not subject to ERISA, providing cash- or equity based incent
ives, health, medical, dental, disability, accident or life insurance benefits
or vacation, severance, retention, change in control, retirement, pension or savings benefits, that are sponsored, maintained or contributed to by NBS or the Business or are for the benefit of current or former employees or directors of NBS or the Business or any other entity which would be aggregated with the Company and treated as the same employer under Code Section 414(b) or (
c) (an "ERISA Affiliate") (the “
company Benefit Plans") or under which NBS, the Business or any ERISA Affiliate may have liability.
(b)
Each Company Benefit Plan has been maintained, operated and administered in
all material respects in accordance with its terms and all applicable Laws, including ERISA and
the Code. Each Company
Benefit Plan intended to be "qualified• within the meaning of Section
401(a) of the Code is the subject of a favorable determination letter from the Internal Revenu
e
Service as to its qualification or, if no such determination
has been made, an application for such determination is pending with the Internal Revenue Service and, to the Company's knowledge, no event has occurred that would reasonably be expected to result in
the disqualification of such Company Benefit Plan.
(c) No Employee
Plan constitutes (i) a
“
multiemployer plan," as defined in Section 3(37) or 4001(a)(3) of ERISA, (ii) a “defined benefit plan,” as defined in Section 3(35), (iii) any other plan
subject to Title IV of ERISA.
No liability under Title IV of ERISA has been Incurred by NBS or the Business that has not been satisfied in full when due
, and, to the knowledge
of any of the Sellers, other than routine claims for benefits, no condition exists tha
t could reasonably be expected to result
in a material li
ability to NBS or the Business under Title IV of ERISA. Full payment
has been mad
e of all amounts which NBS, the Business or any ERISA Affiliate
is required
to have paid as contributions
to
or benefits under any Company Benefit Plan as of the end of the most recent plan year thereof and there are no unfunded
obligatio
ns under any Company Benefit Plan that have not been disclosed in writing prior to the Closing.
All contributions and contribution obligations have been reflected on the Unaudited Financial Statements.
(d) Consummation of the Transactions will not (i) entitle any current or former employee, consultant, officer or director of NBS or the Business to severance, retention
or change in control pay, unemployment compensation or any other payment or (ii)
accelerate the time of payment
or vesting, or Increa
se the amount, of compensation
due any such current or former employee, consultant, officer or director.
(e) There are no material pending
or, to the knowledge of any Seller,
threatened claims against, by or on behalf of, or any Liens filed against or with respect to, any
of the Company Benefit Plans or otherwise involving any Company Benefit Plan.
(f) Neither NBS nor the Business is a party to
an
y agreement, contract
or arrangement that could result, separately or in the aggregate, in the paymen
t of (a) any "excess parachute payments"
within the meaning of Section 280G of the Code, or (b) any amount that will not be fully deductible as a result of Section 162(m) (or any corresponding provision of state, local or foreign tax law).
(g)
No Company Benefit Plan provides benefits, including deat
h or medical benefits (whether or not insured), with respect to current or former
employ
ees or managers of
NBS beyond their retirement or other termination of service, other than (
I) coverage mandated solely by applicable Law, (ii) death benefits or retirement benefits under any "employee
pension benefit plan" (as defined in Se
ction 3(2) of ERISA),
(iii) deferred compensation benefits accrued as liabilities on the books of NBS or (iv) benefits the full costs of which are borne by the current or former employee or director or his or her beneficiary.
(h)
Except as required
by Section 4908B of the Code
and Title I, Part 6 o
f ERISA, there is no liability i
n respect of or any obligation to provide post-retireme
nt health and medical benefits
for retired or former empl
oyees of NBS or the Business.
After the performance of any or all Transactions, the Parent shall be responsible for providing continuation coverage required under Section 4980B of the Code and Title I, Part 6 of ERISA to all former employees of NBS or he Busi
ness who terminated employment
on or before such date and to all persons who are considere
d "M&A qualified beneficiaries"
as defined under Treas. Reg. Section 54.49808-9 in connection with this transaction.
(i)
Neither NBS, the Business nor any ERISA Affiliate has, since October 3, 2004, (I) granted to any Person an interest in a nonq
ualified deferred compensation plan (as defined in Code Section 409A(d)(1)), which interest has been or, upon lapse of a substantial risk of forfeiture with respect
to
such interest, will be subject
to the tax
imposed by
Code Section 09A(a)(1XB) or (b)(4)(A), or (ii) modified the terms of any nonqualified deferred compensation plan in a manner that would cause an Interest previously granted under such plan to become
s
ubject to the taxes imposed by Code Se
ction 409A.
Further, no Person had a legally binding
r
ight to an amount under a nonqualified deferred compensation plan of NBS, the Business or any ERISA Affiliate prior to January 1, 2005 that Is subject to a substantial risk of forfeiture or a requireme
nt to perform future services after December 31, 2004, which would
subject such Person to the taxes imposed by Code Section 409A.
4.20 Employment and Labor Matters
(a)
As o
f the date of this Agreement:
(i) neither NBS nor the Business is a party to or bound by any collective bargaining agreement, work rules or other agreement with any labor union, labor organization, employee association, or works council (each, a "Un
ion") applicable to employees of NBS or the Business
("Co
mpany Employees"), (ii) none of the Company Employees is represented by any Union with respect to his or her employment with
the Company other Business, (iii) to the Sellers' knowledge, within the
past three years, no Union has
attempte
d to organize employees at NBS or the Business or flied a petition with
the National labor Relations Board seeking to
be certified as the bargaining representative of any Company
Employees, (iv)
within the past three years, there have
been no actual or, to the Sell
ers' knowledge, threatened (A) work stoppages, lock-outs or strikes, (B) slowdowns, boycotts, handbilling, picketing, walkouts, demonstrations, leafleting, sit-Ins or sick-outs by Company Employees, causing
significan
t disruption to the operations
of a facility or (C) other form of Union disruption at NBS
or the Business and (v) except
as would not reasonably be
expected to have, individually
or in the aggregate, a Business Material Adverse Effect, there i
s no unfair labor practice, labor dispute or labor arbitration proceeding pending or, to
the knowledge of the Sellers, threatened with respect to Company Employees.
(b) Except for such matters that would not reasonably be expected to
have, individually or in the aggregate, a Bus
iness Material Adverse Effect:
(i) NBS and the Business are, and within the past three years have been, in compliance with all applicable state, federal, and local laws respecting labor and employment, including all Laws relating to dis
crimination, disability, labor
relations, unfair labor pra
ctices, hours of work, payment of wages, employee benefits, retirement benefits, compensation, immigration, workers' compensation,
working conditions, occupational safety and health, family and medical leave, reductions in force
, plant closings, notification of employees, and employee terminations and (ii) neither
NBS nor the Business has any liabilities under the Worker Adjustment and Retra
ining
Noti
fication Act (the "WARN Act") or any state or local Laws requiring notice with respect to such layoffs
or terminations.
(c) To the knowledge
of
the Sellers, in the past three
years, (I) no Governmental Entity has threatened or initiated any material complaints, charges, lawsuits, grievances, claims, arbitrations, administrative proceedings or other proceeding(s) or
i
nvestigation(s) with respect to NBS or the Business arising out of, in connection with, or otherwise rel
ating to any Company Employees or any Laws governing labor or employment and (ii) no Governmental Entity has issued or, to the Sellers'
kn
owledge, threatened to issue any significant
citation, order, judgment, fine or decree against NBS or the Business with respect to any Company Employees or any Laws governing labor or employment.
(d)
The execution of this Agreement and the c
onsummation of the Transactions
will not result in any material breach or viol
ation of, or cause any payment
to be made un
der, any collective bargaining
agreement, employment agreement, consulting agreement or any other employment-related agreement to which the Company or the Business is a party.
4.21
Environmental Laws and Regulations
(a) Except as would not reasonably be expected to have, individually or in
the aggregate, a Business Material Adverse Effect:
(i)
ther
e is no pending or, to the knowledge of the Sellers, threatened
in writing,
claim, lawsuit, investigation or administrative proceeding
against NBS or t
he Business, under or pursuant
to any Environmental Law, an
d neither NBS nor the Business
has received written notice from any person, including any Governmental Entity, (A) all
eging that NBS or the Business has been
or
is in violation or potentially
in violation of any applicable
Environmental Law or otherwise may be liable under
any appli
cable Environmental Law, which
violat
ion or liability is unresolved
or (B) requesting information with respect to matters that could result In a claim of li
ability pursuant to applicable
Environmental Law;
(ii) NBS and the Business
a
re and have been in compliance with
all applicable Environmental Laws and with all permits, licenses and approvals required under Environmental Laws for the conduct of their business or the operation of their facilities;
(iii) NBS a
nd the Business have all permits, licenses and approvals required for the operation
of the
businesses and the operation of their facilities pursuant to applicable Environmental Law, all such permits, licenses and approvals are in
effect
and, to
the knowledge of the Sellers, there is no actual or alleged proceeding to revoke, modify or terminate such permits, licenses and approvals;
(iv)
to the knowledge of the Sellers, there has been no release of Hazardous Materials
at any real p
roperty currently or formerly owned, leased
or o
perated by NBS or the Business in concentrations
or und
er conditions or circumstances that (A) would reasonably be expected to result i
n liability to the NBS or the Business under any Environme
ntal Laws or (B) would require reporting, investigation, remediation or other corrective or response action
by NBS or the Business under any Environmental Law and that has not ot
herwise been addressed through such reporting,
investigation
, remediation or other corrective or responsive
action by NBS or the Business; and
(v) Neither NBS nor the Business
i
s party to any order, judgment or decree that imposes any obligations under any Environmental Law and, to
th
e knowledge of the Sellers, has not, either expressly or by operation of Law, undertaken any such
obligations, including any obligation for corrective or remedial action, of any other person.
(b) As used In this Agreement:
(i) "Environment" means the indoor and outdoor environment, including any ambient air, surface water, drinking water, groundwater, land surface (whether below or above water), subsurface strata, sediment, building, surface, plant or animal life and natural resources.
(ii)
"Environmental Law" means any Law or any binding agreement issued or entered by or with any Gov
ernmental Entity relating to;
(A) the protection of the Environment, including pollution, contamination, cleanup, preservation, protection and reclamation of the Environment; (B) any exposure to or release or threatened release of any Hazardous Materials, including investigation. assessment, testing, monitoring, containment, removal, remediation and cleanup of any such release or threatened releas
e; (
C) the management of any Hazardous Materials, including the use, labeling, processing, disposal, storage, treatment, transport or recycling of any Hazardous Materials and recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials; or (D) the presence of Hazardous Materials in any building, physical structure, product or fixture.
(iii) “Hazardous Materials" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, or defined as such by, or regulated as such under, any Environmental Law, including any regulated pollutant or contamina
nt (including any constituent, product or
by-pr
oduct thereof), petroleum, asbestos
or asbestos-containing material, polychlorinated biphenyls, lead paint, any hazar
dous, Industrial or solid waste,
and any toxic, radioactive, infectious or hazardous substance, material or agent.
4.22
Per
sonal
Property
Except as set forth on Schedule 4.22 and as would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Eff
ect, NBS has good title to, or
a valid and binding leasehold interest in, all the personal property owned or leased by it, free and clear of all Liens.
4.23
Insurance
Except for failures to maintain insurance that, individually or In the aggregate, have not had and would not reasonably be expected to have a Business Material Adverse Effect;
(a)
NBS maintains insurance coverage with reputable and financially sound insurers. or maintains self-insurance practices, in such amounts and covering such risks associated with the Business as are in accordance with customary industry practice for companies engaged in businesses similar to that of NBS and the Business; and
(b)
each of the insurance policies covering NBS and/or the Business (the "Insurance Policies
"
) is in full force and effect, all premiums due thereon have been paid in full and NBS is in compliance in all material respect with the terms and conditions of such Insurance policies.
4.24
Intellectual Property
(a)
Schedule 4.24 contains a true and complete list, as of the date hereof, of all Intellectual Property rights to which NBS or the Business has an interest that are the subject of any issuance, registration, certificate, application or other filing by, to, or with any governmental Authority or authorized private registrar, including registered trademarks. registered copyrights. issued patents, domain name registrations, and pending applications for any of the property rights described in the first sentence of the following subsection ("Compan
y Intellectual Property Rights")
, and any material unregistered Company Intellectual Property Rights.
(b) Except as would not, individually o
r in the aggregate, reasonably be expected to have a Business
Material A
dverse Effect, NBS owns or has a valid right to use
all patents, trademarks, trade names, service marks, domain names, copyrights and any applications and registrations therefor, trade secrets, know-how and computer software (collec
tively, "Intellectual Property Rights") used in connection with and
reasonably necessary
for the Business as currently conducted. To the knowledge of the Sellers, neither NBS nor the Business
has infringed, misappropriated or violated in any material respect any Intel
lectual Property Rights of any third party except where
suc
h infringement, misappropriation or violation would
not, individually o
r in the aggregate, reasonably
be expected to have a Bus
iness Material Adverse Effect.
To the knowledge of the Sellers, no third party is infringing, misappropriating or violating any Intellectual Property Rights owned or exclusively licensed by NBS or the Business.
4.25
Material Contracts
Except as set forth in Schedule 4.25, as of the date hereof and the Closing Date, neither NBS nor the Business is a party to or bound by a
ny Contract that (i) is a
material contract(as such term is defined in Item 601(bX10) of Regulation S-K promulgated by the SEC), (ii) would, after giving effect to the Transactions, limit or restrict NBS or the Business or any successor thereto, from enga
ging
or com
peting in any line of business or in any geographic area that it currently engages in or that contains
e
xclusivity or non-solicitation provisions with respect to customers, (iii) limits or otherwise restricts the ability of NBS to pay dividends or make distributions to its stockholders or (iv) provides for the operation or management of any operating assets of NBS or the Business by any person
other than NBS or ISG (except as contemplated by this Agreement). E
ach Contract
of the type described
in this Section 4.25, whether or not set forth on Schedule 4.25 is referred to herein as a “Company Material Contract."
In addition, any Contract
that provides for the payment
of $10,000 or more, over the term of the Contract, shall be considered a Company Material Contract. Each Company Material Contract is a valid and binding obligation of NBS or the Business enforceable against it and, to the knowledge of the Sellers, each other party thereto, in accordance with i
ts terms (except that (i) such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws, now or hereafter in effect, relating to creditors' rights generally and (ii) equitable remed
ies
of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding
therefor may be brought) and, i
s in full force and effect, and NBS has performed in all material respects all obligations required to be performed by it to the date hereof under e
ach Company Material Contract and, to the knowledge of the Sellers,
each other party to each Company Material Contract has performed in all material respects all obligations requir
ed to be performed by it under such Company
Material Contract, except, in each case, as would not, i
ndividually or in the aggregate,
reasonably be expected to have a Bus
iness Material Adverse Effect.
None of the Sellers has knowledge of, or has received written notice of, any violation of or default under (or any condition which with the passage of time or the giving of written notice would cause such a violation of or default under) any Company Material Contract to which it is a party or by which it or any of its properties or assets is bound, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to have a Business Material Adverse Effect.
4.26
Provided Information
All written information concerning NBS and the Business that has been prepared by or on behalf of NBS and that has been or will be provided to Purchasers in connection with this Agreement or the Transactions, was or will be, at the time made available, correct in all material respects and did not, at the time made available, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statements were made.
4.27
Accuracy of Disclosure
As of the date hereof and as of the date of Closing, the representa
tions and warranties of each of
the Sellers herein, the S
chedules hereto, all documents
and other papers listed therein or required to be delivered pursuant to this Agreement, and all due diligence materials provided by or on behalf of any or all of the Sellers are and shall be true, complete, correct and authentic. No representation or warranty of any of the Sellers contained in this Agreement, and, no document furnished by or on behalf of any of the Sellers pursuant to this Agreement or in connection with the Transactions, contains or will contain an untrue statement of a material fact or omits or will omit to state a material fact required to be stated therein or necessar
y to make the statements made, in the context i
n which made, not false or misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FUSION
Each of the Purchasers, jointly and severally, hereby represents and warrants to each of the Sellers as follows, it being understood that the representations and warranties of Newco refer to a corporation to be formed and such representations and warranties will be true and accurate as of the Closing Date:
5.1 Organization and Qualification
Each of the Purchasers is a corporation duly Incorporated, validly
existing and in good standing under the laws of the State of Delaware, has all requisite corporate power and authority to own,
lease and operate its propertie
s and to carry on its business
as no
w being conducted, and is duly
qualified or licensed and is in good standing to do business in each jurisdiction in which the properties owned, leased or operated by it or the nature of its activities makes
such qualification necessary,
except where the failure to so register would not have a Fusion Material Adverse Effect.
5.2 Authorization and Validity of Agreement
Each of the Purchasers has all requisite corporate power and authority to enter into
this Agreement and to perform i
ts obligations hereunder and to consummate the Trans
actions.
The execution, delivery and performance by each of the Purchasers of this Agreement and the consummation of the Transactions have been duly and validly authori
zed by all necessary corporate action on the part of each of the Purchasers. This Agreement has been
duly executed and delivered by each of the Purchasers and is a legal, valid and binding obligation of each of the Pur
chasers enforceable against it i
n accor
dance with its terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors' right
s generally, (b) as limited by l
aws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (c) to the extent the indemnification provisions contained herein may be limited by applicable federal or state securities laws.
5.3 Brokers or Finders
No
agent, broker, investment banker, financial advis
or or other entity is
or will be entitled, b
y reason of any agreement, act
or statement by Purchasers or their respective officers, employees, consultants or agents, to any financial advisory, broker's, finder's or similar fee or commission, to reimbursement of exp
enses or to indemnification or
contribution in connection with any of the Transactions, and each of the Purchasers hereby indemnify and hold each of the Sellers harmless from and against any and all claims, liabilities or obligations with respect
to any such fees, commissions,
expenses or claims for indemnification or contribution asserted by any entity on the basis of any act or statement made or alleged to have been made by the Purchasers or their respective officers, employees, consultants or agents.
5.4 No Approvals
or Notices Required; No Conflict with Instruments
The execution, delivery and performance of this Agreement and the related agreements by each of the Purchasers will not contravene or violate (a) any existing law, rule or regulation to which either of them is subject, (b) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which Is applicable
to either of the Purchasers, or
(c) the Certificate of Incorporation or Bylaws of either of the Purchasers; nor will such execution, delivery or performance violate, be In conflict with or result in the breach (with or without the giving of notice or lapse of time, or both) of any term, condition o
r provision of, or require the consent of any other party to, any
mortgage, Indenture, agreement, contract, commitment, lease, plan or other instrument, document or understanding, oral or written, to which either of the Purchasers is a party or by which either of the Purchasers is otherwise bound. Except as set forth on Schedule 5.4, no authorization, approval or consent, and no registration or filing with, any governmental or regulatory official, body or authority is required in connection with the execution, delivery and performance of this Agreement by either of the Purchasers.
5.5 Legal Proceedings
Except as set forth in Schedule 5.5, there is no (a) Legal Proceeding pending or threatened, against, involving or affecting either of the Purchasers or any of their respective assets or rights; (b) judgment, decree, injunction, rule, or order of any Gov
ernmental Entity applicable to
the that has had or is reasonably likely t
o have, either Individually or i
n the aggregate, a Fusion Material Adverse Effect; (c) legal Proceeding pending or threatened against either of the Purchasers that seeks to restrain, enjoin or delay the consummation of this Agreement or any of the other Transactions or that seeks damages in connection there with; or (d) injunction, of any type. For the avoidance of any doubt, each of the Sellers and each of their respective shareholders, board of directors, officers, employees, agents or attorneys (each an "Indemnified Party"), are hereby indemnified by each of the Purchasers from and against any and all claims, liabilities, obligations, costs and attorneys' fees and held harmless in the event a Legal Proceeding is pending or threatened against any Indemnified Party. This section shall survive Closing for a period of two (2) years.
5.6. Fusion Stock
The Fusion Stock to be issued to the Members pursuant to the terms of this Agreement has been duly authorized, and when issued upon payment of the agreed upon consideration therefore, will be duly and validly issued, fully paid and non-assessable, and will not be issued in violation of the preemptive or similar rights of any stockholder.
5.7 SEC Filings
Fusion has a class of securities registered under Section 12 of the Securities Exchange Act of 19
34, as amended (the "Exchange
Act"), and accor
dingly,
files quarterly, annual and current reports and other information with the SEC under the Exchange Act (such reports and Information filed by Fusion with the EC for the preceding 12 months being hereinafter referred to as the "SEC Reports"). Copies of all information filed by Fusion with the SEC,
including the SEC Reports, may be examined at the website
of
the SEC at www.sec.gov. Fusion
has filed all reports required to be filed by it under the Exchange Act and the SEC Reports do not contain a misstatement of a material fact, omit to state a material fact or omit to state any fact necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading.
5.8 Accuracy
of Disclosure
As of the date hereof and as of the date of Closing, the representations and warranties of each of the Purchasers herein, the Schedules hereto, all documents and other papers listed therein or required to be delivered pursuant to this Agreement, and all due diligence ma1erials provided by or on behalf of each of the Purchasers are and shall be true, com
plete, correct and authentic. No representation
or warranty of Purchasers contained in th
is Agreement, and, no document
furnished by or on behalf of either or both of them pursuant to this Agreement or in connection with the Transactions, contains or will contain an untrue statement of a material fact or omits or will omit to state a material fact required to be stated therein or necessary to make the statements made, in the context in which made, not false or misleading.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1
Confidentiality
(a) Unless otherwise agreed to in writing by the Party disclosing the same (a "Disclosing
Party"), ea
ch party (a “Receiving Party”)
will, and will cause its officers, directors, employees, and agents (collectively referred to as such party's "Representatives") to, (I) keep all Confidential Information (as defined below) of the disclosing party in stri
ct confidence and not disclose
or reveal any such Confidential Information to any person or Entity other than those Representatives of the receiving party who are participating in effecting the
Transactions or who otherwise need to know
such Confid
ential Information,
(ii) use such Confidential I
nformation only in connection with consummating the Transactions and enforcing the Receiving Party's rights hereunder, and
(iii) no
t use Confidential Information in any manner
detrimental to the Di
sclosing Party.
In the event that a Receiving Party is requested pursuant to, or required by
, applicable law or regulation
or by legal process to disclose any Confidential
Information of the Disclosing Party, the Receiving Party will provide
the Dis
closing Party with prompt
notice of such request(s) to enable the Disclosing Party to seek an appropriate protective order.
(b)
A Party's obligations hereunder will not apply with respect to
Confidential Information that (i) is disclosed to a third party with the Disclosing Party's writ
ten approval, (ii) is required to be produced under order of a court of competent jurisdiction or other
similar requirements of a governmental agency, or (iii) is required to be disclosed by applicable law
or regulation. If a receiving
party uses a degree of care to prevent disclosure of the Confidential Information that is at least as great as the care it normally takes to preserve its own information of a similar nature, it will not be liable for any disclosure that occurs despite the exercise of that degree of care, and in no event will a Receiving Party be liable for any indirect, puni
tive, special or consequential
damage
s. In the event this Agreement
is terminated, each party will, if so requested by the other party, promptly return or destroy all of the Confidential Information of such other party, including all copies, reproductions, summaries, analyses or extracts thereof or based thereon in the possession of the receiving party or its Representatives.
(c)
For purposes
of this Section 6.1, “confidential Information" of a
party means all confidential or proprietary information about such party that is furnished by it or its Representatives to
the
other party or the other party's Representatives, regardless of
the manner in which it is furnished. Confidential Information does not include, however, information which (i) has been or in the future is published or is now or in the future is ot
herwise in the public domain
thr
ough no fault of the Receiving Party or its Representatives
or is otherwise
required to be disclosed by law;
(ii) was available to the Receiving Party or its Representatives on a non-confidential basis prior to its disclosure by the Disclosing Party; (iii) becomes available to the Receiving Party or its Representatives on a non-confidential basis
from a person or Entity other than the Disclosing Party or its Representatives who is not otherwise bound by
a
confidentiality agreement
with the Disclosing Party or its Representatives, or is not otherwise prohibited from transmitting the information to the Receiving Party or its Representatives, or (iv) is independently developed by the Receiving Party or its Representatives through persons who have not had, either directly or indi
rectly, access to or knowledge of such information. Nothing contained in this Section 6.1 shall be construed to limit a Receiving Party's right
to independently d
evelop or acquire
products without
use of the Disclosing Party's
Confidential Information.
(d) Except as contemplated herein, or as may be required by applicable law, no announcement or disclosure
of this transaction, or matters related to this transaction, shall b
e made by either Party without
the prior written approval of the other Party; provided, however, that nothing in the foregoing shall restrict Fusion from making such disclosures as it reasonably deems necessary to comply with its reporting obligations under the Exchange Act.
(e) All prior agreements between the parties concerning or relating to non-disclosure, confidentiality, or non-solicitation, including but not limited to the
Non-Disclosure Agreement previously signed by the Parties, shall remain in full force and effect.
6.2 Cooperation Pending Closing.
From the Effective Date of this Agreement through the Closing, and wi
th a view towards consummation of the Transactions and a smooth transition of managerial and supervisory functions following the Closing, Sellers agree to (a)
discus
s with Purchasers
material operational decisions relating to the Business, (b) consider the advice and recommendations of Purchasers with respect to those decisions, (c) allow Purchase
rs and their representatives
access to the Business with a view towards familiarizing themselves w
ith day-to-day operations, (d) maintain books and records of the Business in accordance with GAAP, (e) provide Purchasers
with
regular financial statements and access to the books and records of
the Busine
ss, and (f) provide Purchasers
with operational and managerial reports concerning the Business as may reasonably be requested by Purchasers.
6.3
Operation of the Business
Notwithstanding the preceding Section 6.2, and except
as p
rovided otherwise
herein, during the period between
the Effective Date and Closing,
or if applicable the termination of this Agreement as provided herein, NBS shall at a minimum continue to operate its Business in the ordinary course consistent with past practice and shall not, without the prior written consent of Purchasers:
(a)
Sell lease, assign, transfer or otherwise dispose of any of its material assets.
(b) Make any material capital business expenditures.
(c)
Create, incur, assume or suffer to exist, any business related mortgage,
pledge, lien, charge, security i
nterest or encumbrance of any kind upon any of its property, assets, income, or profits, whether now owned or hereafter acquired.
(d)
Borrow funds.
(e)
Sell, assign, convey or transfer any assets material to NBS or the Business other than inventory or other assets held for resale in the ordinary course of business.
(f)
Issue, redeem. or repurchase any equity or debt securities.
(g)
Amend its Articles of Organization or Operating Agreement.
(h)
Enter into any agreement to do any of the foregoing.
(i)
Take any action that could reasonably be foreseen to diminish the value of the Business, or could result in a Business Material Adverse Effect.
6.4
Organizational I
ntegration
Following the Effective Date and prior to Closing, the Parties shall work together in good faith to develop effective plans for the integration of the organizations of NBS, the Business, and Purchasers into a common organization (the "Integration Plan"), which Integration
Plan shall not be implemented
until Closing, unless
otherwise agreed
to by the Parties. Furthermore, the Integration Plan shall be considered Confidential Information within the meaning of
Section 6.1 above. Immediately
after Closing, all personnel included in the Integration Plan shall becom
e direct or indirect employees
of Fusion, and shall thereafter be entitled to
such compensation and benefits as are typically accorded
t
o similarly situated employees of Fusion or as
may otherwise be dictated by this Agreement Purchasers shall advise Sellers at least 30 days prior
to Closing or any employee(s)
of the Business who are not included in the Integration Plan and who, therefore, will not be retained following Closing. Nothing in the
foregoing shall guarantee any
employee of the
Business continued employment
following the Closing, and Purchasers reserve the right to make all decisions affecting personnel of the Business from and after the Closing.
6.5
Employment of Kaufman
At the Clo
sing, Kaufman shall enter into an Employment Agreement in
form and substance reasonably acceptable to Purchasers and Kaufman which Employment Agreement shall define the role and responsibilities of Kaufman and shall Include those terms of employment described on Schedule 6.5, and, to the extent not described on such schedule, compensation and benefits not to exceed Fusion's current compensation and benefits structure for its executive officers.
6.6
No Solicitation or Acceptance of Proposals
Commencing upon the Effective Date and continuing until the Closing of the transaction, none of the Sellers, including their respective directors, officers, employees, representatives, members, managers, or other agents, shall, directly or indirectly, enter into any discussion with, solicit or entertain offers from, negotiate with or in any manner encourage, discuss, accept or consider any proposal from any person or Entity other than Purchasers relating to the purchase or sale of the Business, the equity or assets of NBS or ISG and/or any interest therein (a "Proposa
l"). Each of the Sellers shall i
mmediately cease and suspend any existing activities, discussions, or negotiations with any person or Entity (other than Purchasers) conducted heretofore with respect to any Proposal. Sellers shall immediately advise Fusion of the identity of any person or Entity who submits any Proposal or other communication regarding a Proposal, and provide Fusion with a copy of the submission.
6.7 Due Diligence
Closing of the transaction shall be subject to the satisfactory completion of due diligence by Purchasers. Purchasers shall commence its due diligence promptly following execution of this Agreement. Sellers shall provide Purchasers and their representatives with access to the facilities, management, books and records of NBS and the Business at all reasonable times upon reasonable notice; and Purchasers agree to conduct due diligence in such a manner as to cause as little interference with the operation of the Business as is practicable. In the event that Purchasers determine not to proceed with the Transactions, and therefore to terminate this Purchase Agreement based upon its due diligence review, Purchasers shall so notify Sellers within three (3) business days of any such determination, whereupon this Pur
chase Agreement shall cease to
be of further force or effect except as hereinafter set forth. In the event Purchasers have not terminated this Agreement under this Section 6.7 prior to the later of April 30, 2012 or delivery of the Audit (as hereinafter defined) (such later date being referred to as the (“Outside Date"), Purchasers shall have no further right to terminate this A
greement under this Section 6.7;
it being understood, however, that this provision shall not alter Purchaser's right to terminate this Agreement in the event of a Business Material Adverse Effect or otherwise under Section 9.1.
6.8 Audit of Books and Records
Closing of the Transactions shall be subject to the completion and delivery to Purchasers of an audit (the "Audit") of the financial statements of NBS, ISG and the Business, to the extent required by and under the applicable rules and regulations of the SEC (the "Audi
ted Financial Statements"), by an audit firm
acceptable to Pur
chasers and
their professional advisors, in their sole discretion. Sellers shall use their best efforts to reasonably cooperate with its audit firm and Purchasers in the conduct of the Audit. The Parties agree to use their best efforts to cause the Audit to be completed on or before April 30, 2012, subject to an automatic extension to May 31, 2012, if necessary (as may be further extended by mutual consent
of the Parties, the "Audit Due
Date"). Purchasers may termi
nate this Agreement within ten (
10) business days following receipt of the Audited Financial Statements in the event that (a) the Audited Financial Statements are determined by Fusion's auditors not to be in compliance with GAAP and/or the rules and regulations of
the SEC applicable to Fusion, (
b) the filing of such Audited Financial Statements with the SEC could cause Fusion to be out of compliance with its obligations
under Federal securities laws and/or (c)
the financial condition and results of operations reported in the Audited Financial Statements are materiall
y and adversely different from the financial condition or results of operations reported in the
Unaudited Financial Statements. The Parties' obligations to pay the fees and expenses of the Audit are set forth in Section 10.2 below.
6.9 Regulatory Approvals
Closing of the Transactions shall be subject to the Parties obtaining all required regulatory approvals to enable Purchasers to own and operate the Business post-Closing. The Parties shall cooperate and work together to obtain such regulatory approvals and to transfer all transferable licenses to Fusion and/or Newco or their affiliates, as approp
riate. Each Party shall comply
w
ith all reasonable requests of
the other Party that are necessary to obtain such regulatory approvals and/or to transfer licenses. The Parties' obligations to pay the fees and expenses of the regulatory approvals process are set forth in Section 10.2 below.
6.10 Third-Party Consents
Closing of the Transactions shall be subject to the Parties' obtaining all required approvals for the assignment to Newco and/or Fusion, as necessary, of agreements, contracts, commitments,
leases, licenses, permits, or other authorizations that may not
be assigned without the consent of a third par
ty (“
Third Party Consents"). Each Party shall comply with all reasonable requests of the other Party, which are necessary to obtain such Third-Party Consents.
6.11 Commercially Reasonable Efforts
Each Party shall use its respective commercially reasonable efforts to satisfy all conditions necessary for the completion of
due diligence, the completion
of the Audit, the obtaining of the regulatory approvals, the obtaining of third-party consents, satisfaction of all condition precedents to Closing, and the Closing of the Transactions.
6.12 Further Assurances
Each of the Sellers, from time to time after the Closing, at Purchasers' request, shall execute, acknowledge and deliver to Purchasers such other instruments of conveyance and transfer, and will take such other actions and execute and deliver such other documents, certifications and further assurances as Purchasers may reasonably request in order to vest more effectively in Purchasers, or to put Purchasers more fully in possession of the Interests and the Business.
6.13 No Solicitation of Employees or Agents
Commencing on the Effective Date and continuing until the Closing or, in the event the contemplated transaction is not closed, one (1) year followin
g termination of this Agreement,
no Party to this Agreement shall, directly or indirectly, solicit or advise an employee or agent of the other Party to terminate his employment or agency with the other Party, or solicit or employ said employee or agent to work in any capacity for that Party.
6.14 Obligations Post Closing
(a)
For three (3) years following Closing, none of the Sellers, including any of their respective directors, officers, employees and agents, will, directly or indirectly, on behalf of any other person or Entity, in any way or in any other capacity, solicit any customer of NBS,
ISG or the Business, including without limitation calling upon any such customer for the purpose of soliciting or providing to such customer any products
or services which are the same as or similar to those provided or intended to be provided by Fusion or its affiliates.
(b)
As partial consideration for payment of the Purchase Price hereunde
r and as a material inducement
to Purchasers to consummate the Transactions, on or before the Closing, Kaufman agrees to enter into a
restrictive covenant agreement
with Purchas
ers on terms that are mutually agreeable to Purchasers
and Kaufman
providing that, for a period
of three (3) years from Closing, he (i) will not engage in or conduct. directly or indirectly,
in any capacity, any business activities that compete with the business
of Fusion or its affiliates within those states in which the Business is conducted or in which Fusion or its affiliates currently or In the future have customers; and will not, directly or indirectly, deliver service in any such state; and (ii) will not solicit employees or agents of NBS, ISG, the Business or Fusion to leave the service of NBS, ISG, the Business or Fusion, as the case may be; and (iii) will not solicit customers of NBS, ISG, the Business or Fusion to divert their business away from, or to reduce their level of business with, NBS, ISG, the Business or Fusion.
6.15 Financing
The Parties understand and acknowledge that Purchasers' consummation of the Transactions is subject to
and dependent upon its ability
to secure adequate financing to pay the Purchase Price under this Agreement and the ISG Asset Purchase Agreeme
nt, and provide for reasonable working capital needs following the Closing,
as deter
mined by Purchasers, through debt and/or equity financing
("Necessary Fun
ding"). Accordingly, Closing
of the Transactions shall, at all times, be contingent upon Purchasers securing Necessary Funding; provided, however, that in the event Purchasers have not secured commitments for Necessary Funding prior to the expiration of 60 days following the Audit Due Date, any Party may terminate this Agreement.
6.16 Registration of Fusion Stock
Fusion hereby agrees that, in the event it
f
iles a registration statement under
the Securities Act (other than on Form S-4, S-8 or any successor form) whereby it seeks to register shares of its common stock on behalf of one or more third parties, for resal
e, Fusion will include such of the
Fu
sion Stock as Sellers request for registration in such registration
tatement; provided, however, (a) the number of shares of Fusion Stock to be registered shall be subject to cutback to the extent required by the SEC or a placement agent, (b) the costs and expenses of such registration shall be borne by Fusion to the same extent as Fusion bears the costs an, expenses of registration on behalf of other selling shareholders, (c) Fusion shall have the right to withdraw any registration statement referred to in this Section in its sole discretion, (d) the registration rights provided herein shall not apply to the extent that the Fusion Stock to be registered may be resold without registration and without legend in accordance with the applicable requirements of the SEC, and (e) Sellers' entitlement to the registration rights set forth in this Section shall be subject to Sellers providing such Information as may reasonably be requested by Fusion to enable Fusion to comply with its regulatory obligations in connection with the registration for resale of the Fusion Stock.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by Sellers
(a) From and after the Closing, each of
the S
ellers, jointly and severally,
shall defend, reimburse, indemnify and hold harmless each of the Purchasers and its shareholders, directors, officers, employees and agents, (each such
person being referred to as a (“
seller Indemnified Pa
rty") against and in respect of;
(i)
Any and all liabilities and obligations of any nature whatsoever, relating to NBS and/or the Business that accrue prior to the Closing and are not assumed by Purchasers in accordance with the terms of this Agreement.
(ii)
Any and
all actions, suits, claims, or
leg
al, administrative, arbitration,
governmental
or
other proceedings or investigations against any Seller Indemnified Party, including but not limited to claims made by any regulatory agency (each a "Proceeding"), to the extent that any such Proceeding pertains to any occurrence, action, inaction or transaction occurring prior to the Closing Date.
(iii)
Any and all damages, losses, deficiencies, liabilities, costs and expenses incurred or suffered by any Seller Indemnified Party that result from, relate to or arise out or (A) any misrepresentation, breach of warranty or nonfulfillment of any agreement or covenant on the part of any of the Sellers under this Agreement or from any misrepresentation in or omission from any certificate, response to due diligence, schedule, statement, document or instrument furnished by any of the Sellers pursuant hereto or in connection with the negotiation, execution or performance of this Agreement or (B) the information set forth on Schedule 4.11(b) to the extent that such information pertains to any occurrence, action, inaction or transaction occurring prior to the Closing Date.
(iv)
Any claim by any former officer, employee, or creditor of the Business that pertains to any occurrence, action, inaction or transaction occurring prior to the Closing Date.
(v)
Any and all actions, suits, claims, proceedings, investigations, demands, assessments, audits, fines, judgments, costs and other expenses (including, without limitation, reasonable legal fees and expenses) incident to any of the foregoing or to the enforcement of this Section 7.1.
(vi)
Any and an matters for which indemnification Is to be provided by ISG or any other "Seller" under the ISG Purchase Agreement.
(b)
Notice must be given within a reasonable time after discovery of any
fact or circumstance on which
a Seller Indemn
ified Party could claim
indemnification ("Claim" or "Claims"). The notice shall describe the nature of the Claim, if the Claim is determinable, the amount of the Claim, or if not determinable, an estimate of the amount of the Claim. Each Seller Indemnified Party agrees to use its reasonable best efforts to minimize the amount of the loss or injury for which it is entitled to indemnification. The Sellers shall at all times
have the primary obligation of defending any Claim and shall pay all costs and
a
ttorneys'
fees associated therewith whether or not the action is brought directly against a Seller Indemnified Party. The Seller Indemnified Party shall have the right to select counsel to defend the Claim; provided that the identity of such counsel is acceptable to Sellers and Sellers do not unreasonably withhold their consent to such selection. Notwithstanding the foregoing, each Seller Indemnified Party shall be en
titled, at its cost and expense,
to have counsel of its own choosing assume the defense of such Claim against it.
(c)
No Claim for which Indemnification is asserted shall be settled or compromised without the written consent of the Seller Indemnified Party, and such consent shall not be unreasonably withheld.
(d)
A Claim shall be deemed finally resolved in the event a matter is submitted to a court, upon the entry of judgment by a court of final authority.
7.2
Payment of Indemnification Obligation
Each of the Sellers, jointly and severally, agree to pay promptly to any Seller Indemnified Party, the amount of all damages, losses, deficiencies, liabilities, costs, expenses, claims and other obligations to which the foregoing indemnities relate, including reasonable attorneys' fees. Purchasers may setoff any of Sellers' indemnification obligations under this Agreement from any portion of the Purchase Price (not including the Members' Note) following a favorable final resolution per the dispute resolution procedure described in Section 7.1(d) and the terms of the escrow Hold Back described in Section 2.3. Notwithstanding the foregoing, Sellers shall not be ob
ligated to pay indemnification
to Purchasers under t
his Section until such time as
the aggregate amount due hereunder and under Section 7.2 of the ISG Purchase Agreement is at least $100,000.00 (the "Basket"), whereupon the entire amount of indemnification, without regard for the Basket, shall be due and payable. The Sellers' indemnification obligations under this Agreement are not limited by the amount of the escrow Hold Back described in Section 2.4, above.
7.3
Other Rights and Remedies Not Affected
The indemnification rights of each Seller Indemnified Party under this Article VII are independent of and in addition to such rights and remedies as Fusion, Newco and the Seller Indemnified Party may have at law or in equity or otherwise for any misrepresentation, breach of warranty or failure to fulfill any agreement or covenant hereunder, including without limitation the right to seek specific performance, rescission or restitution, none of which rights or remedies shall be affected or diminished hereby.
7.4 Survival
Notwithstanding any right of any Party to investigate fully the affairs of the other Party, Purchasers have the right to rely fully upon the representations, warranties, covenants and agreements of Sellers in this Agreement or in any Schedule, Exhibit, certificate or financia
l statement delivered pursuant hereto, except to the extent that Purchasers have
act
ual knowledge to the contrary.
All such representations, warranties, covenants and agreements by Sellers shall survive the execution and delivery hereof and the Closing hereun
der and the Seller Indemnified Party shall be indemnified in accordance with this Article VII or
other express provisions in this Agreement, and, except as otherwise specifically provided in this Agreement, the obligations shall thereafter terminate and expire at the end of the second (2"d) full year after the Closing Date unless a claim has been asserted prior to that date.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
The respective obligations of Purchasers (see Section 8.1) and Sellers (see Section 8.2) to consummate the Transactions are subject to the satisfaction at or prior to the Closing Date of each of the following conditions:
8.1 Conditions Precedent to the Obligations of Purchasers
The obligation of Purchasers to consummate the Transactions is subject to
the satisfaction at or prior to the Closing Date of each of the following conditions, unless waived by Purchasers in writing:
(a) The representations and warranties of each of the Members and Sellers
contained in Sections 3 and 4 shall be true and correct in all respects as of the date of this Agreement and on and as of the Closing Date, as though made on and as of the
Closing Date. Each other representation and warranty of the Members and Sellers contained in this Agreement shall, if specifically qualified by materiality, be true and correct and, if not so qualified, be true and correct
i
n all material respects in each case as of the date of
this Agreement and on and as of the Closing Date, as though made on and as of the Closing Date.
(b)
Each of the Sellers shall have performed In all material respects all obligations a
nd agreements, and complied in all material respects with all covenants and
conditions, contained in this Agreement to be performed or complied with by each of them prior to or on the Closing Date.
(c) Sellers shall have delivered
to Fusion (i) a certificate, dated the Closing Date, signed on behalf of NBS by the Chief Executive Officer, and by each of the other Sellers by a duly authorized person, certifying as to the fulfillment of the conditions specified in Section 8.1, (ii) a certificate of the Manager(s) of NBS, dated the Closing Date, certifyi
ng as to (A) the good standing of NBS (with good standing certificate attached), (B) due authorization of
this Agreement and the Transactions (wit
h resolutions attached), and (C)
true and correct attached copies of the Articles of Organization and Operating Agreement of NBS, and (iii) a certificate of the Manager of NBS certifying, amo
ng other things the incumbency
of all officers of NBS and Sellers and NBS and Sellers having authority to execute and deliver this Agreement and the agreements and documents contemplated hereby and the Transactions.
(d) All Third Party Consents required under all Company Material Contracts
or otherwise hereunder are obtained and copies thereof delivered to Purchasers.
(e)
Except as set forth on Schedule 8.1(e), on or before t
he Closing, Sellers shall have obtained a release and discharge of any and all liens (including Tax Liens),
security interests, restrictions, defects and encumbrances which affect NBS or the Business, and shall provide Fusion with all UCC-3 forms where applicable.
(f)
There shall not have been any material statute, rule, regulation, order, judgment or decree proposed, enacted, promulgated, entered, issued, enforced or deemed applicable by any foreign or United States federal, state or local Governmental Entity, and there shall be no action, suit or proceeding pending or threatened, which. in Fusion's reasonable judgment (I) makes or may make this Agreement or any of the Transactions illegal, or imposes or may impose ma
terial damages or penalties in connection therewith; (ii)
otherwise prohibits or unreasonably delays, or may prohibit or unreasonably delay Transactions; or (iii) increases in any material respect the liabilities or obligations of Purchasers arising out of this Agreement, or any of the Transactions.
(g)
Purchasers shall have made binding arrangements to complete its acquisition of the assets of ISG pursuant to the ISG Purchase Agreement, contemporaneous with the Closing of the Transactions.
(h)
Purchasers shall not have terminated this Agreement under Section 6.7, above, based upon their due diligence review.
(i)
No party shall have terminated this Agreement under Section 6.15, above, due to the inability to secure Necessary Funding.
(j) Kaufman shall have entered Into the Employment Agreement contemplated by Section 6.5 above.
(k) Purchasers shall not have terminated this Agreement under Section 6.8, above, due to the Audit.
(l) Kaufman shall have executed and delivered the restrictive covenant agreement contemplated by Section 6.14.
(m)
To the extent it is reasonably det
ermined by Fusion to be
legally required, Kaufman shall have delivered to Fusion a spousal consent to the Transactions sufficient to comply with the laws of the State of New Jersey.
(n) There shall be no Excluded Liabilities which NBS, the Business or Purchasers remain liable to pay after the Closing.
(o) All consents to contracts required in connection with the consummation of the Transactions shall have been received and delivered to Fusion.
(p)
Since the date hereof,
nothing shall have occurred, and Purchasers shall not have become aware of any circumstance, change or event having occurred prior to such date, which individually or in the aggregate. has had or, in the reasonable judgment of Purchasers, could be expected to have, a Business Material Adverse Effect or a Material Adverse Affect on (i) the Transactions or Purchaser's liabilities or obligations with respect to such Transactions; or (ii) the business or prospects of NBS, the Business or Fusion (including any potential change or event disclosed on any Schedule which, subsequent to the date hereof, actually occurs).
(q) All approvals and consents by any Governmental Entity required in connection with the consummation of the Transactions shall have been obtained and shall be in full force and effect and delivered to Purchasers; all filings with any Governmental Entity, as are required in connection with the consummation of such transactions, shall have been made; and all waiting periods, if any, applicable to the consummation of such transactions imposed by any Governmental Entity shall have expired.
(r) All actions, proceedings, instruments and documents required to carry out the Transactions or incidental hereto and all other related legal matters shall have been reasonably satisfactory to and approved by counsel for Purchasers, and such counsel shall have been furnished with such certified copies of such corporate actions and proceedings and such other instruments and documents as such counsel shall have reasonably requested.
8.2 Conditions Precedent to the Obligations of Sellers
The obligations of each of the Sellers to consummate the Transactions are also subject to the satisfaction at or prior to the Closing Date of each of the following conditions, unless waived by each of the Sellers:
(a) The representations and warranties of Purchasers contained herein shall be true and correct In all respects as of the date of this Agreement and on and as of the Closing Date, as though made on and as of the Closing Date. Each other representation and warranty of Purchasers contained in this Agreement shall, if specifically qualified by materiality, be true and correct and, if not so qualified, be true and correct in all material respects in each case as of the date of this Agreement and on and as of the Closing Date, as though made on and as of the Closing Date.
(b) Each of the Purchasers shall have performed in all material respects all of their respective obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by Purchasers prior to or on the Closing Date.
(c) Each of the Purchasers shall have delivered to Sellers a certificate, dated the Closing Date, signed on behalf of its Chief Executive Officer certifying as to the fulfillment of the conditions specified in this Section 8.2, including, among other things, the incumbency of each officer of Fusion and Newco having authority to execute and deliver this Agreement and the agreements and documents contemplated hereby and the Transactions.
(d) All actions, proceedings, instruments and documents required to carry out the Transactions or incidental hereto and all other related legal matters shall have been reasonably satisfactory to and approved by counsel for Sellers, and such counsel shall have been furnished with such certified copies of such corporate actions and proceedings and such other instruments and documents as such counsel shall have reasonably requested.
(e) There shall not have been any material statute, rule, regulation, order, judgment or decree proposed, enacted, promulgated, entered, issued, enforced or deemed appreciable by any foreign or United States federal, state or local Governmental Entity, and there shall be no action, suit or proceeding pending or threatened, which, in Sellers' reasonable
judgment (i) makes or may make
this Agreement or any of the Transactions ill
egal, or imposes or may impose material damages or penalties in connection therewith; (ii)
otherwise prohibits or unreasonably delays, or may prohibit or unreasonably delay Transactions; or (iii) increases in any material respect the liabilities or obligations of Sellers arising out of this Agreement, or any of the Transactions.
(f)
Since the date hereof, nothing shall have occurred, and Sellers shall not have become aware of any circumstance, change or event having occurred prior to such date, which individually or in the aggregate, has had or, in the reasonable judgment of Selle
rs, could be expected to have,
a Fusion Material Adverse Effect or a Material Adverse Affect on the Transactions or Seller's liabilities or obligations with respect to such Transactions.
9.1 Termination by Purchasers
In the event any of the conditions contained in Section 8.1 are not fully and completely satisfied as of the Closing Date, and the conditions shall not have been expressly waived in writing by Purchasers, this Agreement shall terminate upon notice by Purchasers to Sellers. In addition, Purchasers shall have the right to terminate this Agreement as provided in Sections 6.7, 6.8 and 6.15, above.
9.2 Termination
by Sellers
In the event any of the conditions contained in Section 8.2 are not fully and completely satisfied as of the Closing Date, and the conditions shall not have been expressly waived in writing by Sellers, this Agreement shall terminate upon notice by Sellers to Purchasers. In addition, Sellers shall have the right to terminate this Agreement (a) In the event of termination of the ISG Purchase Agreement and/or (b) as provided in Section 6.15, above.
9.3 Effect of Termination
In the event of termination of this Agreement pursuant to this Article 9, this Agreement, except as to the provisions of this Agreement which shall expressly survive any termination, shall become void and of no effect with no liability on the part of any party hereto
; provided, however, except as
otherwise provided herein, no such termination sha
ll relieve any party hereto of any liability or damages resulting from
any wi
llful or intentional breach of
this Agreement, including, without limitation, a Party's refusal to consummate the Transactions without legal justification. Notwithstanding the foregoing, In the event that all of the conditions precedent set forth in Section 8.1 have been satisfied or waived by the Purchasers and this Agreement has not otherwise been terminated in accordance with its terms, and Purchasers refuse or otherwise fail to purchase the Interests and otherwise consummate the Transactions, without legal justification, Fusion shall issue to the Members, as their respective interests may appear, as liquidated damages, Fusion Stock having an aggregate market value of $500,000. The number of shares of Fusion Stock shall be calculated and paid based upon the average closing price of the shares of Fusion Stock for fifteen (15) trading days immediately preceding the date the last condition precedent to be satisfied under Section 8.1 has been satisfied or waived.
ARTICLE X
MISCELLANEOUS
10.1 No Waiver, Survival of Representations, Warranties, Covenants and Agreements
The respective representations and warranties of the Parties contained herein, or in any schedule or certificate or other instrument delivered pursuant hereto prior to or at the Closing, shall not be deemed waived or otherwise affected by any investigation made by any Party hereto or any knowledge of any Party for whose benefit such representations and warranties are made. The respective covenants and agreements of the Parties contained herein which are to be performed after the Closing shall survive the Closing Date and shall only terminate in accordance their respective terms.
10.2 Expenses
Each of the Parties shall bear its own costs and expenses associated with its completion of due diligence and the other activities contemplated by this Purchase Agreement; provided, however, that (a) Fusion and Sellers shall equally split and pay the expenses associated with the Audit, unless the Audit cannot be completed or the Audit Indicates that the financial condition of the Company is materially different from that represented by Sellers, in which case the expenses of the Audit shall be paid entirely by Sellers; and (b) Fusion shall pay all costs associated with obtaining the regulatory approvals contemplated by Section 6.9 above. Except as aforesaid, expenses of NBS or the Business incurred as a part of this transaction shall not be considered incurred in the normal course of business and shall be discharged at or prior to Closing or shall cause a corresponding adjustment to the Purchase Price.
10.3 Remedy
Sellers acknowledge that the Business is unique and the Purchasers would experience significant difficulty in identifying and acquiring a similar business whi
ch to acquire. Accordingly, in addition to any other remedy available to Purchasers, each of the
Sellers agrees that Purchasers may invoke any equitable remedy to enforce performance hereunder, including, without limitation, the remedy of specific performance.
10.4 Notices
(a) All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be In writing and shall be deemed to have been duly given if delivered personally (by courier service or otherwise), or mailed (certified or registered mail with postage prepaid and return receipt requested), or sent by confirmed facsimile, as follows:
|
Notice to Purchasers:
|
Fusion Telecommunications International, Inc.
Attn.: President
420 Lexington Avenue, Suite 1718
New York, NY 10170
Facsimile No.: (212) 972-7884
|
|
|
|
|
Notice to NBS:
|
Network Business Systems, LLC
Attn.: Jon Kaufman
155 Willowbrook Boulevard, 2
nd
Floor
Wayne, NJ 07470
Facsimile No.:(973) 638-2199
|
|
Notice to Sellers (other than NBS):
|
Jonathan Kaufman
155 Willowbrook Boulevard, 2
nd
Floor
Wayne, NJ 07470
Facsimile No.: (973) 638-2199
|
(b) Notwithstanding
the
foregoing, notices to Sellers and Purchasers may
be contained in a single notice to all of them, respectively.
(c)
Any such notice shall be deemed to have been given (i) upon
actual delivery, if delivered by
hand; (ii) on the following b
usiness day, if delivered by same-day or overnight courier service; (iii) on the third (3rd) business day following the mailing of such notice by certified or registered mail; and (iv) upon sending such notice, if sent via facsimile
with transmission receipt confirmation.
10.5 Entire Agreement
This Agreement (including the Schedules and Exhibits and other documents referred to herein) constitutes the entire agreement between the parties with regard to the subject matter hereof, and supersedes all prior agreements and understandings, oral and written, between the parties with respect to the subject matter hereof.
10.6 Assignment; Binding Effect; Benefit
Neither this Agreement nor any of the rights, benefits, or obligat
ions hereunder may be assigned by any Party (whether by
operatio
n of law or otherwise) without the
prior writte
n consent of the other Party.
Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective successors and assigns.
10.7 Amendment
This Agreement may not be amended except by an instrument in writing signed by or on behalf of each of the Parties hereto.
10.8 Headings
The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
10.9 Counterparts; Facsimile/Email Signatures
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original. and all of which together shall be deemed to be one and the same instrument. This Agreement may be executed and delivered by facsimile or email signature.
10.10
Governing Law and Venue
To the extent that the General Corporation Law of the State of Delaware (the “DGCL") purports to apply to this Ag
reement, the DGCL shall apply.
In all o
ther cases, this Agreement and any and all matters arising directly or indirectly herefrom shall be governed
by and construed and enforced in accordance with the Internal laws of the State of New York applicable to agreements made and to be performed entirely in such state, without giving effect to the conflict or choice of law principles thereof. For all matters arising directly or indirectly from this Agreement ("Agreement Matters"), each of the parties hereto hereby (a) irrevocably consents and submits to the sole exclusive jurisdiction of the United States District Court for the Southern District of New York and any state court in the State of New York that Is located in New York County (and of the appropriate appellate courts from any of the for
egoing) in connection with any
legal action, lawsu
it, arbitration, mediation, or other
legal or quasi legal proceeding (“Proceeding") directly or indirectly arising out of or relating to any Agreement Matter; provided that a party to this Agreement shall be entitled to enforce an order or judgment of any such court in any United States or foreign court having jurisdiction over the other party, (b) irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such Proceeding in any such court or that any such Proceeding which is brought in any such court has been brought in an Inconvenient forum, (c) waives, to the fullest extent permitted by law, any Immunity from jurisdiction of any such court or from any legal process therein, (d) irrevocably waives, to the fullest extent permitted by Jaw, any right to a trial by jury in connection with a Proceeding, (e) agrees not to commence any Proceeding other than in such courts, and (f) agrees that service of any summons, complaint, notice or other process relating to such Proceeding may be effected in the manner provided for the giving of notice as set forth in herein.
10.11
Joint Participation In Drafting this Agreement
The parties acknowledge and confirm that each of their respective attorneys have participated jointly in the drafting, review and revision of this Agreement and that it has not been written solely by counsel or one party and that each party has had the benefit of its inde
pendent legal counsel's advice
with respect to the terms and provisions hereof and its righ
ts and obligations hereunder.
Each party hereto, therefore, stipulates and agrees that the rule of construction to the effect that any ambiguities are to be or may be resolved against the drafting party shall not be employed in the interpretation of this Agreement to favor any party against another and that no party shall have the benefit of any legal presumption or the detriment of any burden of proof by reason of any ambiguity or uncertain meaning contained in this Agreement.
10.12
Severability
The provisions of this Agreement shall be deemed severable and the invalidity or unenfor
ceability of
any
provision shall not affect the
val
idity or enforceability of the
other provisions hereof.
10.13
Enforcement
The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific ter
ms or were otherwise breached.
It is accordingly agreed that the Parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement initially in accordance with the provisions of Section
10.10 above, but to the extent that the courts of exclusive jurisdiction cannot issue an effective order of injunction or specific enforcement. then in any court of competent jurisdiction. The provisions of this Section shall be in addition to any other remedy to which they are entitled at law or in equity.
10.14
Attorneys' Fees and Costs
Unless expressly
set forth in the Agreement, if any action or o
ther proceeding is brought for
the enforcem
ent or interpretation of this Agreement, or because of any alleged dispute, breach
or default in conne
ction
with any of the provisions of this Agreement
, the successful or prevailing
Party shall be entitled to
recover reasonable attorneys'
fees and other costs incurre
d in that action or proceeding (including,
without limitation, reasonable attorneys'
fees and costs incurr
ed in all appellate proceedings)
, in addition to any other relief to which it may be entitled.
10.15
Delays
and Omissions
No delay or omission to exercise any right, power or remedy ac
cruing to any party under this
Agreement, up
on any breach or default of any other party under this Agreement,
shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deeme
d a waiver of any other breach
or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party o
f any provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent
specifically
set forth
in such writing. All remedies, either under this Agreement
or by law or otherwise afforded to any party, shall be cumulative and not alternative.
10.16
Securities L
egends
FOR RESIDENTS OF ALL STATES
: THE SECURITIES
OFFERE
D HEREBY
H
AVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1
933 OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM
THE REG
ISTRATION REQUIREMENTS OF SAID ACT AND
SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER SAID
ACT
AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE CO
MMISSION, ANY STATE SECURITIES COMMISSION
OR
ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED
THE MERITS OF
THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS TERM SHEET. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
10.17 Representation by Counsel
Each Party represents
and warrants to the other that it has consulted with and has bee
n represented by the attorney and accountant of its choosing with reference
to this Agreement and the transactions contemplated herein.
IN WITNESS WHEREOF
, the parties hereto have executed this Agreement as of the date first above written.
SCHEDULE A
MEMBERSHIP INTERESTS
Name and Address of Member
|
Percentage Ownership of
Interests
|
Jon Kaufman
|
15%
|
LK Trust
|
85%
|
TOTAL
|
100%
|
Schedule 2.3(b)
Co-Lo facilities Space Agreements:
Telx- 60 Hudson NY, NY; 56 Marietta, Atlanta, GA; 36 NE
2"d
St., Miami, FL
Zayo- 165 Halsey St, Newark, NJ
Tishman Realty- 165 Halsey
St
,
Newark, NJ
Verizon - Little Ferry Central Office
All costs and agreements covering all voice and data services and circuits supporting the Business
All Governmental and quasi-governmental reporting and remittance requirements related to the operations of the business and the authorities listed in schedule 2.8(e) below.
Non-Standard Customer Contracts:
MST Acquisition Group LLC (wholesale agreement)
Supplier List (each supplier may have multiple accounts):
Abovenet
|
Global Crossing
|
PCCW Global Limited
|
Appletree
|
GTT
|
Reliance
|
Alpheus
|
Hibernia Atlantic
|
Sidera
|
ATL Communications
|
Host.net
|
Syniverse
|
AT&T
|
Hurricane
|
Tel-X
|
Atantic Metro
|
Hutchison Global
Communication
|
Time Warner
|
Bandcon
|
iNetworks
|
Transbeam
|
Bearhill
|
lnternap
|
Verizon
|
Bell Canada
|
lntrado / E911
|
Verizon Core
|
Broadview
|
lpnetzone
|
Verizon DSL
|
Centurylink
|
level 3
|
Verizon MCI International
|
Cooperative
|
Megapath
|
Verizon Business
|
Comcast
|
Metcom Network Services
|
Wave 2 Wave
|
Earthlink
|
Metro Optical
|
Windstream
|
FiberTech
|
New England Fiber Inc
|
Windstream
|
FPL Fibernet
|
Nitel
|
XO Communications
|
Frontier
|
Paetec
|
Zayo Bandwith
|
|
Neustar
|
Zayo Colocation
|
Agent Agreements:
3D COMMUNICATIONS
|
FAHEEM BILAL
|
QUICKCONNECT.COM
|
3D MANAGEMENT
|
FICOTEL CORPORATION
|
QUOTE COLO
|
3ACOMM
|
FIVE RIVERS IT INC.
|
R & L SERVICE CONSULTANTS
|
4 CCORE
|
FLAT RATE TELEPHONE
|
R PULLMAN DBA TELEDYNAMICS
|
A PLUS TELECOM CORPORATION
|
FLAVINE IT SYS/DON’T WORRY INC
|
RADIUS NETWORKS, LLC
|
A.S.K. TECHNOLOGIES
|
FRANCIS J. LANZEITA
|
RAM COMMUNICATIONS
|
ABADI GAP VOICE SERV LTD
|
FRONTDESK, INC.
|
RAMESYS
|
ACCESS COMMUNICATIONS INC
|
FUNDS 2 SHARE
|
RAY
|
ACCESS IT, LLC
|
G. WAGNER DBA DISCOVERY COMM.
|
RAYMOND LALLKISSOON
|
ACCESS MARKETING & DATA INC.
|
GAIN COMMUNICATIONS, INC
|
RELIABLE COMMUNICATIONS, LLC
|
ADAM FARCIANO
|
GARY J BERENFELD
|
RESOURCE
C.DM
MUNICATIONS, INC
|
ADVANCED TECHNOLOGY CONSULTING
|
GENESIS NETWORKS INC
|
RETTRE ON SPENDING INC
|
ADVANCED TELCO SERVICES, INC
|
GLOBAL INTEGRATED SOURCE, LLC
|
RICHARD HELMS
|
ADVANCED WIRELESS COMM.
|
GLOBALNET COMMUNICATIONS, INC
|
RICHARD J. ROONEY
|
AL PREZIOSA
|
G-ONE, INC.
|
RICHARD L ADAMS
|
ALAN FISHBEIN
|
GOTHAM TELECOM
|
RIVERBEND MANAGEMENT
|
ALL BUSINESS SOLUTIONS
|
GRACE LEVIN
|
ROBERT A LEHTINEN
|
ALL CLEAR COMMUNICATIONS
|
GRAVITY SYSTEMS INC
|
ROBERT C. OPPERMAN, JR.
|
ALLCONNEX
|
GREGG PERSKY
|
ROBERT KOSCULSZKA
|
ALLIANEX, LLC
|
GROVER C AMIE
|
ROBERT A. SIEFERT
|
ALLIEO COMMUNICATIONS
|
GRYPHONE
TELECOM CONSULTANTS
|
ROBERT ZAVIS
|
ALPHA OMEGA TELECOM. INC.
|
HIDALGO COMMUNICATIONS -NJ LLC
|
RONALD ADAMS
|
AMERICAN BUSINESS COMM., INC
|
HILLTOP TECHNOLGIES, LLC
|
ROSE MARIE BUZAKO
|
AMES, INC
|
HORIZON TELECOMMUNICATIONS INC
|
ROY M.
BUHR DBA MCC SERVICES
|
AMPOL HOLDINGS, INC
|
HOSPITALITY TELECOM, INC
|
RTNS INC.
|
ANCHOR CONSULTING
|
IAT, UC DBA ONETEL
|
RUMSON MEDIA CORP/RUMSON VIDEO
|
ANDOVER SOLUTIONS LLC
|
ICCS & CO. LLC
|
RWR TELECOM
|
ANDRES COLLAZOS
|
IFL INTERNATIONAL, INC
|
RYAN SARNATARO
|
ANJ
COMMUNICATIONS
|
INDUSTRIAL PRODUCTS AND SVCS
|
S/CM VOIP,
LLC
|
ANTHONY LOCARAO
|
INFOHIGHWAY
|
SANBAR CONSULTING INC
|
ANTHONY MELANCOM
|
INNOVATIVE COMMUNICATIONS, INC
|
SANZ
PROFESSIONAL GROUP,
INC,
|
ARTHUR LITTMAN
|
INNOVATIVE MARKETING, INC
|
SAVANT
|
ASHER FORST
|
INNOVATIVE TELECOM SOLUTIONS
|
SAVANT SOLUTIONS
|
ASSOC
NTWK
MGMT & AFFILLIATES
|
INTEGRATED MINDS LLC
|
SCHAFER MANAGEMENT
|
ATAC
|
INTEGRATED TELECOMMUNICATIONS
|
SECURE PATH NETWORKS
|
ATC VOICE/DATA, INC.
|
INTELECOM, INC
|
SELECT COMMUNICATIONS
|
ATEL COMMUNICATIONS
|
INTELENETCOMMUNICATIONS INC
|
SHANNON C KEENE
|
AUDIO GRAPHIC SERVICES
|
INTELISYS COMMUNICATIONS, INC
|
SHIRLEY D CABSLDO
|
AVC CONSULTING
|
INTERNET AREA NETWORK, INC
|
SIGNAL ACCESS INTERNATIONAL
|
BAR ONE TELCOMM CORP
|
INTERNET GLOBAL CORPORATION
|
SILENT
PARTNER TELECOM, INC
|
BAROAN TECHNOLOGIES
|
INTERNET RETIREMENT ALLIANCE
|
SIRCDIAN NETWORKS
|
BARRY BELLIN (IN-HOUSE REP)
|
ISG METRO
|
SKYBUSINESS INC.
|
BENJAMIN TURNER
|
1SPBX
|
SLS TELECOMMU
NICATIONS, LLC
|
BERGEN BUSINESS TELEPHONE
|
ITC- INDEPENDENT TELEPHONE
CON
|
SMARTEL
CORPORATION
|
BIARS DAVIS AND ASSOCIATES
|
ITD SOLUTIONS
|
SMART-GUYS.COM, LLC
|
BILL SCHMALL
(
IN
HOUSE
REP)
|
J & R
TELECOMMUNICATIONS
INC
|
SOLOMON'S WITT
|
BISPAY INC
|
J FALLON INC
|
SOLVEFORCE.COM
|
BITCOM, LLC
|
JACKIE GALVAN (IN-HOUSE REP)
|
SPECIALIZED FINANCIAL SVCS INC
|
BIZUNK, INC
|
JACKSTER
PROPERTIES, LLC
|
STACFY FURAMA
|
BOBY’S &
ASSOCIATES
|
JAMES J. COLEMAN
|
STANLEY
DZIEOZIC
|
BP INNOVATIONS INC
|
JAMES TWAY
|
STEALING CAPITAL
|
BAET A.
COOKSEY
|
JAYSON PFEFFER
|
STEW PRICE
|
BRET A. COOKSEY
|
JEFFREY
A.
KNIGHT
|
STEVENS COMMUNICIATONS
|
BRIDGE COMMUNICATIONS CORP
|
JERAY COLATRELLA(IN-HOUSE REP)
|
STEWKRELL TRAD. (REFERRAL REP)
|
BRIDGEVINE, INC
|
JIM TEL LLC.
|
STRAJTSHOT
|
BUSINESS BUILDERS, INC
|
JIM CONSULTING INC
|
STRATEGIC ADVISORS GROUP LTD
|
BUSINES5
MANAGEMENT SOLUTIONS
|
JNP CONSULTANTS
|
STRATEGIC PRODUCTS & SERVICES
|
BUSINESS SOLUTIONS ENTERPRISES
|
JOEL LEVINE
|
STREAMLINE TELECOM LLC
|
CALVIN O TONONI
|
JOE'S SHOW
|
SUPPLY CONNECTION INC
|
CAMPUS TELEVIDEO
|
JOHN F MCDEVITT
|
SYNERGY TELECOMMUNITIONS INC
|
CARBON TECH
|
JOHN GIAMBALVO
|
TALK TIME INC
|
CAROLINA TEL, INC
|
JOHN MAUCHLY
|
TARIFF MANAGEMENT CONSULTANTS
|
CCG
|
JOHN RUIZ
|
TATOH COMMUNICATION NETWORKS
|
CDS
|
JOHN THORN
|
TAURAX SYSTEM & SERVICES
|
CELERITY WIRELESS INC
|
JOHN W. MAJOR
|
TC MARKETING CORPORATION
|
CELLULAR INTERACTIVE
|
JOHN YACHNUR III
|
TECH SERVANT INC
|
CGA BENEFITS, INC
|
JON ESKIN
|
TECHNICAL INTEGRATION SERVICES
|
CHARLES E DEMARCO
|
JOSEPH ROMEO DBA RAZY DAYZ IND
|
TEL-AFFINITY CORP
|
CHEM INTERNATIONAL INC
|
JUAN DAVID RENAO
|
TELARUS INC
|
CHERYL REICHICK
|
KENNETH JURCICH
|
TELCOMAVEN CONSULTING L.P.
|
CHOICE COMMUNICATIONS
|
KIDS SAFETY NETWORK
|
TELCORP INTERNATIONAL
|
CITY YEAR SAN JOSE/SILICON VAL
|
KRISTI POPE MEDICAL FUND
|
TELECOM BROKERAGE HOUSE LLC
|
CLEAR TELECOMMUNICATIONS INC
|
KSN MASTER AGENT
|
TELECOM BROKERS - USA
|
CLOUD-COM ENVISION, LLC
|
L.B. CONSULTING
|
TELECOM BUYER
|
CMS
|
LANCASTER COMMUNICATIONS GROUP
|
TELECOM CONSULTANTS LLC
|
CNN CAPITAL VENTURES CORP.
|
LAIRY SHAW / LD RESELLER
|
TELECOM DATA SERVICE
|
COLOCATION AMERICA INC
|
LCA & ASSOCIATES
|
TELECOM MARKETING, INC
|
COMM. BUSINESS SERVICES, INC
|
LEANN A PHENNICIE
|
TELECOM SOLUTIONS MANAGEMENT
|
COMMON SENSE TECHNOLOGIES LLC
|
LEF BRADFORD
|
TELE-CONSULT ASSOCIATES
|
COMMUNICATION NETWORK SOLUTION
|
LEWIS KRONGOLD
|
TELEDOMANI INC
|
COMPLETELY WIRED, LLC
|
LIVE CIRCUIT LLC
|
TELEGRATION, INC
|
COMPUHELP, INC
|
LOCATION DEVELOPMENT LLC
|
TELEMETRICS COMMUNICATIONS INC
|
COMPUTEL COMMUNICATIONS SYSTEM
|
LOGICVIEW CORPORATION
|
TELE-NET TECHNOLOGIES CORP
|
COMPUTAS INC
|
LOS ALTOS NETWORK
|
TELEPHONE SAVINGS CLUB OF AMER
|
COMSERV
|
LOUIS AMSTERDAM
|
TELEPHONE SYSTEM BROKERS
|
CONNECT 2 BENEFIT LLC
|
LYNDA WOLF
|
TELEPHONE TECHNOLOGIES LLC
|
CONSULTEDGE, INC
|
MAC CONSULTING GROUP DBA SAC
|
TELEPOWER CORPORATION
|
CONTACT COMMUNICATIONS
|
MALIBU COMMUNICATIONS
|
TELESOURCE CONSULTING, LLC
|
CONTINUITY PLUS COMMUNICATIONS
|
MANAGED CONCEPTS, LLC
|
TELEVERGR INC
|
CONVERGED ACCESS LLC
|
MARC REINSTEIN
|
TEL-MEDIA
|
CONVERGED NETWORK SERVICES GRP
|
MARIA MATTENA
|
TELSPAN INTERNATIONAL LTD
|
CORNERSTONE CHAPEL
|
MARK S. VALDEZ
|
THE ACTEVA GROUP, INC
|
CORP. COMMUNICATION CONCEPTS
|
MARKET DIRECT LLC
|
THE FORCE DISTRIBUTOR
|
CORPORATE COMM, SEVICES
|
MATT HUSSEN
|
THE GUJNZBURG CORPORATION
|
CORPORATE QUARTERMASTER INC
|
MAXIMILLAN ENTERPRISES INC
|
THE REAL PSYCHIC FRIENDS NTWK
|
CORPORATELL, INC
|
METRO OPTICAL
|
THE ROCKLAND GROUP
|
COTEL VOICE & DATA INC.
|
MICROCORP
|
THE TPM GROUP - CONSULTEDGE
|
CPA DIRECTORY COM
|
MIDNIGHT STORM PROMOTIONS
|
THREE X ENTERPRISES
|
CRC
|
MILLENNIUM TELEPHONE INC.
|
TIM PUCILOWSKI
|
CREATIVE TELECOMMUNICATIONS
|
MPD TELESOLUTIONS INC.
|
TIM WRIGHT
|
CREDENTIAL, INC.
|
MST
|
TOM HERRINGTON
|
CROSS STAR NETWORK SOLUTIONS
|
MURRAY BARTON
|
TOTAL CARRIER SOLUTIONS, INC
|
CROSSNET COMMUNICATIONS
|
NASTO LTD INC/KENNON WORLDWIDE
|
TOTALCOM SOLUTIONS, LLC
|
CSN 47, LLC
|
NATIONAL CANCER CENTER
|
TOWER COMMUNICATIONS
|
CULLMAN MARKETING SERVICES
|
NATIONAL COMM RESOURCE
|
TPAN-TEST POSITIVE AWARE NTWK
|
CULLMAN MKTG SERVICES - WOOTEN
|
NATIONAL TEL PLANS, INC.
|
TRANQUILITY NETWORKS, LLC
|
CURTIS B. WAITE
|
NATIONWIDE COMMUNICATIONS, INC.
|
TRAVELLERS UTILITY SUPPLY INC.
|
D & M ENTERPRISE
|
NAT'L ALL. TO END HOMELESSNESS
|
TRI STATE VOICE & DATA LLC.
|
D BOBET/THE LONG DISTANCE CO.
|
NAT'L PROCESSING SYSTEMS, INC
|
T-SAP, LLC
|
DANICK AND ASSC (IN-HOUSE REP)
|
NAVISINK PARTNERS LLC
|
TSS - ERS, LLC
|
DANIEL CONNDR
|
NAZAREND A. SESTOSO VII
|
U.S TELEBROKERS
|
DANIEL S. PAROINE
|
NCS INC.
|
UNITED CEREBRAL PASLY ASSOC.
|
DART COMPUTER SERVICES
|
NIC GROUP, INC
|
UNITED TELECOM
|
DATA VOICE EXCHANGE, INC.
|
NICE TOUCH
|
UPTIME MATTERS, LLC
|
DAVID EROR
|
NICHOLAS CUCINELLO
|
US FEDERATION OF SM BUS, INC
|
DEAN BUSINESS SYSTEMS LLC
|
NICK CONUEY
|
US TEL, INC.
|
DELATUSH SYSTEMS INC
|
NORMAN H. PETTERSEN
|
US TELECOM GROUP
|
DENIS CRONKRIGHT
|
NORMAN MOON
|
US TELEMANAGEMENT
|
DEP CEIL COMMUNICATIONS
|
NORTH AMERICAN SM BUS GRP, INC
|
USB COMMUNICATIONS LLC
|
DIGITAL DIVERSITY INC
|
NUI TELECOM INC DBA TELCORP
|
USE NEXT AZ DEALER
|
DIGITAL SERVICES
|
OCG TELECOM
|
UTS - UTILITY TELCOM SOLUTIONS
|
DISCOUNT TELEPHONE SERVICES
|
ONE CONNECT, INC.
|
VALUE TELECOM
|
DISTINCTIVE VOICE & DATA
|
ONE SOURCE SOLUTIONS
|
VALUUNS, LLC
|
DJU TECHNOLOGIES
|
OPEN VOICE & DATA, INC
|
VANISHED CHILDREN'S ALLIANCE
|
DO NOT USE
|
OPERATION OUTLOOK
|
VENTURE GROUP ENTERPRISES
|
DONALD NICELES TCRC
|
P.C. OUTLET
|
VEROLYNN WOODS HYMW & ASSOC, INC
|
DON'T WORRY INC.
|
PAMELA S. HOWER
|
VETT DATA (METRO NORTH)
|
DOUG IMC CREEDY
|
PATRICIA ANDERSON
|
VICTOR PIZZOLATO
|
DOVE COMMUNICATIONS
|
PATRICIA GEORGE
|
VIKING COMMUNICATIONS COMPANY
|
DP SCIENCES
|
PATRICK MC GUGAN
|
VINCENT CHRISTEL
|
DRAGON ENTERPRISES, INC
|
PATRICK VANDERBERG
|
VISICORE
|
DSW
|
PAULIN COMMUNICATIONS CORP
|
WAVE 2 WAVE COMMUNICATIONS, INC
|
OVI SOLUTIONS, INC
|
PEGASUS OFFICE SERVICES
|
WEBSTAR TECHNOLOGY RESOURCES
|
E.TAUB DBA THE LONG DIST CO
|
PEGGY ECHEL BARGER
|
WELLSPRING CONSULTING GRP, LLC
|
EASY ACCESS COMMUNICATION CORP
|
PHONE DATA CONNECT
|
WESTPORT CORPORATION
|
ECHO POINT SYSTEMS, LLC
|
PHONE TECH COMMUNICATIONS, INC.
|
WILLIAM DELLER
|
EDIGITAL
|
PIC 2
|
WILLIAM M HEIMANN
|
EDWARD W HETTRICR
|
PLANIT BUSINESS SOLUTIONS, LLC
|
WINTEL
|
ENTERPRISE NTWK SOLUTIONS LLC
|
POLISH TELEVISION CHICAGO
|
WMN, INC.
|
EXCELERANT, INC.
|
PRECISION COMMUNICATIONS INC.
|
WYSE COMMUNICATIONS
|
EXPENSE MANAGEMENT, INC.
|
PREFERRED TECHNOLOGY PARTNERS
|
YOUR CHATHAM OFFICE
|
EXPENSE REDUCTION SPECIALISTS
|
PRESIDIO NETWORKED SOLUTIONS
|
YOUTH ALERT, INC.
|
EXPERT SERVICE PROVIDERS LLC
|
PROGRESSIVE COMM, MGMT, INC
|
ZELDA TEL COM
|
EXPRESS COMMUNICATIONS
|
QOS TELECOM, LLC
|
|
Schedule 2.3(c)
Blank
Schedule 2.5(c)
Account
Number
|
|
Name
|
|
MRC
|
|
|
Commission
%
|
|
|
Monthly
Commission
|
|
|
Advance
Amount
|
|
9941-37903
|
|
Windjammer
|
|
$
|
22,000.00
|
|
|
10%
|
|
|
$
|
2,200.00
|
|
|
$
|
26,400.00
|
|
9941-39418
|
|
Windjammer
|
|
$
|
20,915.00
|
|
|
15%
|
|
|
$
|
3,137.25
|
|
|
$
|
37,647.00
|
|
9941-38266
|
|
Windjammer
|
|
$
|
22,000.00
|
|
|
10%
|
|
|
$
|
2,200.00
|
|
|
$
|
26,400.00
|
|
9941-37902
|
|
Windjammer
|
|
$
|
16,070.40
|
|
|
10%
|
|
|
$
|
1,607.04
|
|
|
$
|
19,284.48
|
|
9941-39666
|
|
Windjammer
|
|
$
|
5,995.00
|
|
|
15%
|
|
|
$
|
899.25
|
|
|
$
|
10,791.00
|
|
9941·39725
|
|
ccs
|
|
$
|
11,995.00
|
|
|
15%
|
|
|
$
|
1,799.25
|
|
|
$
|
21,591.00
|
|
9941-39624
|
|
MDU
|
|
$
|
13,695.00
|
|
|
15%
|
|
|
$
|
2,054.25
|
|
|
$
|
42,302.00
|
|
9941-39624
|
|
MDU
|
|
$
|
3,000.00
|
|
|
15%
|
|
|
$
|
450.00
|
|
|
$
|
10,800.00
|
|
9941-39922
|
|
Revel
|
|
$
|
12,150.00
|
|
|
15%
|
|
|
$
|
1,822.50
|
|
|
$
|
21,870.00
|
|
9941-39922
|
|
Revel
|
|
$
|
8,575.00
|
|
|
15%
|
|
|
$
|
1,286.25
|
|
|
$
|
15,425.00
|
|
9941-39922
|
|
Revel
|
|
$
|
3,000.00
|
|
|
15%
|
|
|
$
|
450.00
|
|
|
$
|
5,400.00
|
|
9941-40100
|
|
Wallace Automot1ve
|
|
$
|
300.00
|
|
|
14%
|
|
|
$
|
42.00
|
|
|
$
|
504.00
|
|
9941·40118
|
|
Protective Products
|
|
$
|
144.00
|
|
|
10%
|
|
|
$
|
14.40
|
|
|
$
|
172.80
|
|
9941-40157
|
|
Great Healthworks
|
|
$
|
920.00
|
|
|
15%
|
|
|
$
|
1l8.00
|
|
|
$
|
1,656 00
|
|
9941·40254
|
|
Procacc1
|
|
$
|
303.00
|
|
|
10%
|
|
|
$
|
30.30
|
|
|
$
|
363.60
|
|
9941-40254
|
|
Procaccl
|
|
$
|
287.00
|
|
|
15%
|
|
|
$
|
43.05
|
|
|
$
|
516.60
|
|
9941-40215
|
|
Ammunition Art
|
|
$
|
12.00
|
|
|
15%
|
|
|
$
|
1.80
|
|
|
$
|
21.60
|
|
9941-39922
|
|
Revel
|
|
TBD
|
|
|
15%
|
|
|
|
|
|
|
TBD
|
|
9941-40118
|
|
ProtectiVe Products
|
|
TBO
|
|
|
15%
|
|
|
|
|
|
|
TBD
|
|
9941-39130
|
|
Escape Media
|
|
$
|
74,000.00
|
|
|
10%
|
|
|
$
|
7,400.00
|
|
|
$
|
21,200.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Advance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
paid
|
|
|
$
|
263,345.08
|
|
Schedule 2.5(d)
A settlement dated November 7, 2011 between NBS and the Lyndhurst Board of Education providing for the payment of $200,000.00 to NBS in two payments. The first payment was received in November of 2011. The second and final
payment is due to paid on or before November 30, 2012. The current amount due under the settlement agreement is $100,000.00
Schedule 2.8(a)
Blank
Schedule 2.8(b)
Blank
Schedule 2.8(c)
Blank
Schedule 2.8(d)
None that are not otherwise detailed on another schedule contained herein
Schedule 2.8(e)
Federal lnterexchange authority
USF collections and remittance authority
PUC or equivalent Intrastate LD resale authority in 48 continental US States
Facilities based CLEC authority in NY and NJ
Non-Facilities based CLEC authority in: CA,
CT,
FL, GA, MA, MD, OH, PA, TX, VA
Verizon interconnection agreements in NJ and NY
Authority to do business and collect sales tax in 48 continental US States
Schedule 2.8(f)
NBS in-house programs including:
CT, DID tracking, Equipment Tracking, NBS Facilities Manger, Sales Assistant, Winquote, Cater, TOPS
NBS
V.o.I.C.E platform
Schedule 2.8(h)
Schedule 2.8(i)
See Schedule 2.3(b)
Schedule 2.8(j)
See Schedule 2.3(b)
Schedule 4.5
Blank
Schedule 4.9
The approval of such state and federal telecommunications regulatory authorities as may be required to permit the change in ownership of NBS.
Schedule 4.10
Blank
Schedule 4.11(b)
NBS has the following number of TDM local circuits installed in the following states without having CLEC
authority
AL
|
3
|
AZ
|
4
|
CO
|
6
|
DC
|
4
|
IL
|
7
|
IN
|
4
|
KY
|
2
|
MN
|
4
|
MO
|
4
|
MS
|
2
|
NC
|
9
|
NE
|
1
|
NH
|
4
|
NV
|
2
|
OK
|
3
|
SC
|
1
|
TN
|
4
|
UT
|
3
|
VT
|
1
|
WA
|
1
|
WI
|
2
|
Schedule 4.16
Blank
Schedule 4.17
Blank
Schedule 4.19
Blank
Schedule 4.22
Blank
Schedule 4.24
The domains: NBSvoice.com, thevoicemanager.com, NBSvoicemanager.com
Schedule 4.25
Blank
Schedule 5.4
No Approvals or Notices Required;No Conflict with Instruments
The approval of such state and federal telecommunications regulatory authorities as may be required to permit the change in ownership of NBS.
Schedule 5.5
legal Proceedings
Scott Needleman,Dorit
z.
Needleman,and Efralm Wasserman v.Chalm Tornhefm,Christos Valkanos, YisraelM.Tornheim,NathanielTurbiner,Raylto,Inc.,Vossi Alaev,and Fusion Telecommunications International,Inc.
New York State Court, County of Kings (Index No.24255/09)
On June 14,
2010,
three individuals filed an action against a former customer of Fusion and other associated persons,and against Fusion. The plaintiffs alleged that the non-Fusion defendants accepted funds from the plaintiffs for investment in real estate,but subsequently used some or all of those funds for other purposes. The plaintiffs further alleged that the non-Fusion defendants made certain payments to Fusion and they seek repayment of those sums in the amount of $237,913 plus interest. Fusion believes that the plaintiffs' claims are without merit as the bank account information provided by the plaintiffs themselves shows that the majority of the funds allegedly paid to Fusion were actually paid to other non-affiliated entities. Moreover, those funds that were received by Fusion were payment for specific telecommunications equipment and services purchased by the non-Fusion defendants,and Fusion had no knowledge of any alleged misuse of funds
by
the non-Fusion defendants.
Schedule 6.5
Employment of Kaufman
Base Compensation:
|
$200,000 per year,payable in regular semi-monthly installments according to the Company's normal payroll practices.
|
|
|
Incentive
Compensation:
|
Eligible for such annual incentive compensation payments as may be awarded by the Compensation Committee and/or the
Board
of Directors to the executive management of the Company, based upon
the
achievement of Company performance objectives.
|
|
|
Employee Stock Options:
|
Eligible for such stock option awards as may be made from time to time by the Compensation Committee and/or the Board of Directors,based
on
performance.
|
|
|
Employee Beneflts:
|
Eligible for the basic benefits provided to
all
Company employees, including medical coverage,dental coverage, life insurance, 401K plan,
etc
.
Also eligible each year for eight scheduled holidays, three floating holidays, three personal days,
and
for vacation based upon the Company's published vacation policy.
|
|
|
Expense Reimbursement:
|
Eligible for reimbursement of all approved business related expenses, including required business travel, entertainment, vehicle mileage,
cell
phone expense, etc.
|
|
|
Employment Conditions:
|
Employment is subject to the completion of a background check and the execution of Fusion's employee confidentiality agreement.
|
Schedule 8.1(e)
Blank
Page 71
Exhibit 10.43
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT
(the "Agreement) is made as of this 30th day of January 2012 (the "Effective Date) by and among Fusion Telecommunications International, Inc. ("Fusion"}, a corporation organized under the laws of the State of Delaware; NBS Acquisition Corp. ("Newco" and together with Fusion sometimes collectively hereinafter referred to as "Purchasers"), a corporation to be formed under the laws of the State of Delaware as a wholly-owned subsidiary of Fusion; Interconnect Systems Group II LLC ( "ISG" or the company"), a limited liability company organized under the laws of the State of New Jersey; Jonathan Kaufman ("Kaufman"), a resident of the State of New Jersey; lisa Kaufman as trustee of the JK Trust JK Trust"), a New Jersey Trust and Jonathan Kaufman as trustee of the LKII Trust ("LKII Trusn a New Jersey Trust. Fusion, Newco, ISG, Kaufman and LK are sometimes hereinafter referred to individually as a "Party" or collectively as the "Parties:
WHEREAS
,
ISG is a limited liability company organized and in good standing under the laws of the State of New Jersey; and
WHEREAS,
Kaufman is a manager of ISG; and
WHEREAS,
ISG is engaged in the business of providing back office support for telecommunications services (the "ISG Business"); and
WHEREAS,
Network Billing Systems, LLC is a limited liability company organized under the laws of the State of New Jersey ("NBS") that is affiliated with ISG through common control; and
WHEREAS,
ISG owns certain assets, such assets being more fully described in Section
2.2 hereof and the schedules described therein (the "Assets); and
WHEREAS,
NBS is engaged in the business of providing telecommunications services
(the "Business ). and utilizes the Assets in connection with its operation of the Business; and
WHEREAS,
contemporaneous herewith NBS and each of its members (the "NBS Sellers") have entered into an agreement of even date herewith (the "NBS Purchase Agreement") pursuant to which the NBS Sellers have agreed to sell all of their right, title and Interest in and to the issued and outstanding membership interests of NBS (the "Interests"), to Newco: and
WHEREAS,
the total purchase price to be paid by Purchasers for the Interests and for the Assets is twenty million dollars ($20,000,000); and
WHEREAS,
subject to Newco's acquisition of the Interests, ISG desires to sell the Assets to Newco and Newco desires to purchase the Assets from ISG, upon the terms and conditions hereinafter set forth, such that Newco's acquisition of the Assets and the Interests will enable it to own and operate the Business substantially in the manner as it has heretofore been operated.
NOW, THEREFORE,
in consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Certain Definitions
As used in this Agreement, the following terms shall have the following meanings, unless the context otherwise requires:
(a) "Agreement" or "Purchase Agreement" shall mean this Asset Purchase and Sale
Agreement, including all Exhibits and Schedules hereto.
(b) "Business" shall mean the business owned and operated by NBS in conjunction with the Assets of ISG, including the customer base associated with the Business as of the Closing Date.
(c) "Closing" shall mean the consummation of the transactions contemplated by this
Agreement (the "Transactions").
(d) "Closing Date" shall mean the date on which the Closing occurs pursuant to
Section 3.1 of this Agreement.
(e) "Contract" shall mean any note, bond, indenture, mortgage, deed of trust, lease. franchise, permit, authorization, license, contract, instrument, employee benefit plan or practice, or other agreement, obligation, commitment, arrangement or concession of any nature whatsoever, oral or written.
(f) "Entity" shall mean an individual, a partnership, a corporation, a limited liability company, a trust, an unincorporated organization, an association, a joint venture, or other similar entity.
(g) "Fusion Material Adverse Effect" shall mean a Material Adverse Effect on Purchasers or a Material Adverse Effect on the ability of Purchasers to perform their obligations under, and to consummate the transactions contemplated by, this Agreement.
(h) "GAAP" shall mean accounting principles generally accepted In the United States of America as in effect from time to time.
(i) "Governmental Entity" shall mean any court, arbitrator, administrative or other governmental department, agency, commission, authority or instrumentality, domestic or foreign.
j) "Indebtedness" shall mean, with respect to any Entity, (i) every liability of such Entity (excluding, in the case of a consolidating Entity, intercompany accounts) for borrowed money, for reimbursement of amounts drawn under letters of credit, bankers' acceptances or similar facilities issued for the account of such Entity, for notes issued or assumed as the deferred purchase price of property or services (excluding accounts payable), for debts relating to a capitalized lease obligation, for all debt attributable to sale/leaseback transactions of such Entity; and (ii) every liability of others of the kind described in the preceding clause (i) that such Entity has guaranteed or which is otherwise a legalliability of that Entity.
(k) "Intellectual Property" shall mean all domestic or foreign rights in, to and concerning: (I) inventions and discoveries (whether patented, patentable or unpatentable and whether or not reduced to practice), including ideas, research and techniques, technical designs, and specifications (written or otherwise), improvements, modifications, adaptations, and derivations thereto, and patents, patent applications. inventors certificates, and patent disclosures, together with divisions, continuations, continuations.jn-part, revisions, relssuances and reexaminations thereof; (ii) trademarks, service marks, brand names, certification marks, collective marks, d/b/a/s, trade dress, logos, symbols, trade names, and other indications or indicia of origin, Including translations, adaptations,derivations,
modifications,combinations and renewals thereof; (iii) published and unpublished works of authorship, whether copyrightable or not (including databases and other compilations of data or information), copyrights therein and thereto, moral rights, and rights equivalent thereto, including but not limited to, the rights of attribution, assignation and integrity; (iv) trade secrets, confidential and/or proprietary information, including ideas, research and development, know how, formulas, compositions, manufacturing and production processes and techniques, technical data, schematics,designs, discoveries, drawings, prototypes, specifications, hardware configurations, customer and supplier lists, financial information, pricing and cost information, financial projections, and business and marketing methods plans and proposals; (v) computer software, including programs, applications, source and object code, data bases, data, models, lgorithms, flowcharts, tables and documentation related to the foregoing; (vi) other similar tangible or intangible intellectual property or proprietary rights, information and technology and copies and tangible embodiments thereof (in whatever form or medium); (vii) all applications to register, registrations, restorations, reversions and renewals or extensions of the foregoing;(viii) Internet domain names; and (ix) all the goodwill associated with each of the foregoing.and symbolized thereby; (x) URL's; (xi) toll free numbers; and (xii) all other intellectual property or proprietary rights and claims or causes of action arising out of or related to any infringement, misappropriation or other violation of any of the foregoing, including rights to recover for past, present and future violations thereof.
(I) "Legal Proceeding" shall mean any private or governmental action, suit, complaint, arbitration, mediation, legal or administrative proceeding or investigation pending or threatened, whether prior to or post closing and whether or not a contingent liability, arising or accruing from actions or activities prior to the Closing Date.
(m) "Lien" shall mean any security interest, mortgage, pledge, hypothecation, charge, claim, option, right to acquire, adverse interest, assignment, deposit arrangement, encumbrance, restriction, lien (statutory or other), or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (Including any conditional sale or other title retention agreement, any financing lease involving substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction).
(n) "Material Adverse Effect" shall mean with respect to an Entity(ies), any circumstance, change or effect that Is, or could reasonably be expected to be, materially adverse to the business, assets, liabilities, obligations, financial condition, results of operations or prospects of such Entity(ies) or which may adversely affect a Party's realization of the intended economic benefits of consummating the Transactions; it being acknowledged that any adverse affect of $50,000 or more shall in any event be deemed a Material Adverse Effect.
(o) "Business Material Adverse Effect" shall mean a Material Adverse Effect on the Business of NBS and ISG, taken as a whole, or a Material Adverse Effect on the ability of NBS and/or ISG to perform their respective obligations under, and to consummate the transactions contemplated by, this Agreement and the NBS Purchase Agreement, as the case may be.
(p) "Purchase Price" shall mean the consideration payable to ISG pursuant to Section 2.5 hereof.
(q} "Tax" or Taxes" shall mean any and all domestic or roreign, federal, state, local or other taxes of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Entity, including taxes on or with respect to income, franchises, windfall or other profits, gross receipts, occupation, property, transfer, sales, use, capital stock, severance, alternative minimum, payroll, employment, unemployment, social security, workers' compensation or net worth, and taxes in the nature of excise, withholding, ad valorem, value added or other taxes, fees, duties, levies, customs, tariffs, imposts, assessments, obligations and charges of the same or a similar nature to any of the foregoing.
(r) "Tax Return" shall mean a report, return or other information required to be supplied to or filed with a Governmental Entity with respect to any Tax including an information return, claim for refund, amended Tax return or- declaration of estimated Tax.
1.2 Terms Generally
The definitions set forth or referenced. in Section 1.1, and elsewhere in the Agreement, shall apply equally to both the singular and plural rorms of the terms. The wor:ds "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". To the "knowledge" of a person or Entity means the actual or constructive knowledge of such person or Entity, after due inquiry.
ARTICLE II
PURCHASE AND SALE
2.1 Agreement to Sell
At the Closing, and except as otherwise specifically provided in this Agreement, the Purchasers will purchase from ISG and ISG will validly and effectively grant, sell, convey, assign, transfer and deliver to Purchasers, upon and subject to the terms and conditions of this Agreement, all of the Assets, free and clear of all Liens, including tax Liens, and will assume only those liabilities of ISG set forth described in Section 2.4 (the "liabilities ).
2.2 The Assets
The Assets referred to in Section 2.1 above shall include, without limitation, all of the following:
(a) All of the issued and outstanding shares or membership interests of another Entity to the extent of ISG's ownership interest therein such that following the Closing, Newco shall own all of the assets of such other Entity, including, but not limited to, cash, cash equivalents. accounts receivable, prepaid expenses, customers, agents, customer agreements, agent agreements, equipment, equipment leases, maintenance agreements, property, property leases, miscellaneous service agreements, and any and all other assets as may be necessary to the ongoing operations of the Business.
(b) All of the Assets, including, but not limited to prepaid expenses, customers, agents, customer agreements, agent agreements, supplier agreements, equipment, equipment leases, inventory, maintenance agreements, property, property leases, miscellaneous service agreements, and any and all other assets as may be necessary to the ongoing business operations of the Business.
(c) The Assets will specifically include all of the following scheduled items:
(i) All items of personal property, including,but not limited to, office furniture, office equipment, office supplies, and other tangible personal property related to the administration of the Business as is,where is and as set forth on Schedule 2.2(c)(i).
(ii) All items of switching equipment, networking equipment, and customer premise equipment as is, where is and as set forth on Schedule 2.2(c)(ii).
(iii) All items of computer equipment, related peripherals, and software licenses (as are assignable) related thereto as is, where is and as set forth on Schedule 2.2(c)(iii).
(iv) All rights under any written or oral Contract. lease, agreement, plan, instrument, registration, license, certificate of occupancy, other permit, certification, authorization or approval of any nature, or other document, commitment, arrangement, undertaking, practice or authorization set forth on Schedule 2.2(c)(lv).
(v) All licenses, permits, and authorizations (collectively, "Licenses and Permits"), subject to Fusion qualifying for all of said Licenses and Permits, listed on Schedule 2.2(c)(v).
(vi) All Intellectual Property, as previously defined, whether registered or unregistered, and any applications therefor utilized by or in any way associated with the Business or the products and services offered by the Business, as set forth on Schedule 2.2(c)(vi).
(vii) All Business Records [as hereinafter defined in Section 3.2(a)(ii)]. If there is a claim made, the Company shall have the reasonable right of access to the Business Records post-Ciosing for the period of the applicable statute of limitations.
(viii) The customer base and all customer information, files, records, data, plans and recorded knowledge, including customer records, customer contracts, customer lists and prospect lists forth on Schedule 2.2(c)(viii), as may be updated to an including the Closing Date, as well as all customer agreements and contracts associated with the foregoing ("Customer Agreements"), except that customer agreements evidenced by ISG's standard form of customer agreement need not be identified on Schedule 2.2(c)(viii).
(ix) The supplier lists and contracts with suppliers set forth on Schedule 2.2(c){ix) ("Supplier Contracts"), as may be updated to an including the Closing Date.
(x) The maintenance and service contracts ("Maintenance Contracts") as are assignable, set forth in Schedule 2.2(c)(x).
(xi) All other assets of the ISG Business that are related to the day-to-day operation of the Business, except for those excluded under Section 2.3.
2.3 Excluded Assets
The Assets referred to in Section 2.2 above shall not include the following:
(a) Prepaid sales agent commissions in the amounts listed in Schedule 2.3(a), as may be updated to and including the Closing Date, shall be reimbursed to ISG, at such time and to the extent such commissions are earned by the respective sales agents and, therefore, become due and otherwise payable to those sales agents had they not received the prepayment.
(b) Certain personal motor vehicles listed in Schedule 2.3(b), provided that
Purchasers shall have no on-going liability therefor.
(c) The right to receive payment of employee loans due from employees of ISG identified on Schedule 2.3(c). If repayment of any such loan is received by Purchasers following the Closing, Purchasers shall pay such amount over to ISG.
(d) Accounts receivables due from affiliates or members to the extent set forth on
Schedule 2.3(e), as may be updated to and including the Closing Date.
(e) The lsgcom.com domain name.
2.4 The Liabilities
The Liabilities referred to in Section 2.1 above shall include, without limitation, all of the following:
(a) All of the liabilities associated with the Business that were incurred in the normal course of the Business and pertain to any occurrence, action, inaction or transaction occurring prior to the Closing Date, to the extent that such liabilities are recorded or reserved against in the Audited Financial Statements (as hereinafter defined in Section 6.8), or if incurred subsequent to the date of such Audited Financial Statements, in the books and records of JSG provided to Purchasers for review, or otherwise disclosed in writing to Purchasers prior to Closing (the "Liabilities").
(b) Ongoing liabilities identified on Schedule 2.4(b), as may be updated to and including the Closing Date, including, but not limited to, leases for office or equipment spaces, leases for equipment and software, Customer Agreements [which, as provided in Section
2.2(c)(viii), if evidenced by ISG's standard form of customer agreement. need not be identified
on Schedule 2.4(b)], Supplier Contracts, Maintenance Contracts and employment and agent agreements, all to the extent the Business is in good standing and current in all respects pursuant to such leases or agreements. When appropriate, liabilities shall be pro-rated as of Closing. Purchasers specifically acknowledge they will be assuming the obligation to pay on going agent commissions (exclusive of prepaid agent commission) as provided for in those agreements that are in good standing.
(c) Notwithstanding the foregoing, there shall be excluded from the Liabilities any liabilities of ISG or the Business that arose prior to the Closing and were not incurred in the ordinary course of the Business, along with the liabilities identified and listed by the Parties in Schedule 2.4(c).shall remain the responsibility of ISG.Such liabilities, if any, shall be referred to as the "excluded Liabilities." The Excluded Liabilities shall be satisfied at or prior to Closing or otherwise modified to the extent necessary so that neither NBS, the Business nor Purchasers shall have any obligation therefor following the Closing.
2.5 Purchase Prfca and Payment
The purchase price ("Purchase Price) to be paid to ISG for the Assets to be acquired by Newco at Closing shall be equal to the net book value of the Assets as of the most recently available ISG interim balance prior to the Closing Date. The Purchase Price shall be subject to the provisions of Section 2.6, below, and shall be comprised of a payment by wire transfer or certified check to ISG at Closing less the escrow Hold Back (as hereinafter defined).
2.6 Hold Back and Escrow Account
Ten percent (10%) of the Purchase Price otherwise to be paid to ISG at Closing shall be withheld,in cash, at Closing and shall constitute a "hold back" (the "Hold Back") to be retained in escrow pursuant to the terms of an escrow agreement to be mutually agreed upon by the Purchasers and the Sellers, and entered into on or prior to the Closing, and shall be disbursed in accordance with the escrow agreement (a) to the Purchasers to offset (i) any damages to either or both of them caused by breaches of the representations, warranties and covenants made by any of the Sellers in this Purchase Agreement and/or any of the NBS Sellers under the NBS Purchase Agreement, and/or (ii) any liabllilies of ISG or the Business that (A) were not incurred in the normal course of the Business and pertain to any occurrence, action, inaction or transaction occurring prior to the Closing Date or (B) that were Incurred in the normal course of the Business and pertain to any occurrence, action, inaction or transaction occurring prior to the Closing Date but were not recorded or reserved against on the Audited Financial Statements or in any other document or instrument furnished to the Purchasers by or on behalf of any of the Sellers in connection with this Agreement or any of the NBS Sellers under the NBS Purchase Agreement, or (b) to ISG in accordance with the escrow agreement to the extent not offset pursuant to clause (a) of this Section.Pursuant to the escrow agreement, one-half of the escrow Hold Back, less any amount offset pursuant to clause (a), above, shall be disbursed from escrow to lSG six months following the Closing Date and the balance of the Hold Back, less any amount offset pursuant to clause (a), above, shall be disbursed to ISG one year following the Closing Date.
ARTICLE Ill
CLOSING
3.1 Closing
The Closing shall take place at 10:00 a.m. (Eastern Time) at the offices of Fusion, 420
Lexington Avenue, Suite 1718, New York, New York 10170, on the fifth business day following the date on which Fusion provides ISG with written notice that the last of the conditions set forth
in Article a is satisfied or, if permissible, waived in writing, or on such other date and at such
other time or place as is mutually agreed by the Parties to this Agreement in writing.
3.2 Items to be Delivered at Closing
(a) At the Closing, and subject to the terms and conditions contained in this
Agreement, Sellers shall deliver to Purchasers the following:
(i) Such bills of sale with covenants of warranty, assignments, endorsements, and other good and sufficient Instruments and documents of conveyance and transfer, in form and substance satisfactory to Purchasers and their counsel, as shall be necessary and effective to convey, transfer and assign to, and vest in, Purchasers all of Sellers' right, title and interest in and to the Assets, including, without limitation, (i) good, valid and marketable title in and to all of the Assets that are owned, (ii) good and valid leasehold interests in and to all of the Assets that are leased, and (iii) art of the Company's rights under all agreements, Contracts, commitments, leases, plans, bids, quotations. proposals, licenses, permits, authorizations,Instruments and other documents to which the Company is a party or by which they have rights on the Closing Date and which are related to the Business.
(ii) All agreements, Contracts, customer prospect lists, commitments, leases, plans, bids, quotations, proposals, licenses, permits, authorizations, instruments, manuals and guidebooks, price books and price lists, customer and subscriber lists, supplier lists. sales records, files, correspondence, and other documents, books, records, papers, files and data belonging to ISG and used in the operation of the Business (the "Business Records"). The Business Records shall be delivered in such form and media (e.g., written, electromagnetic, digital, etc.) as the Business Records are maintained by ISG in the ordinary course. Simultaneously with such delivery, Sellers shall execute and deliver all such documents as may be required to put Purchasers in actual possession and operating control of the Assets and the Business.
(b) At the Closing, and subject to the terms and conditions contained in this
Agreement, Purchasers shall deliver the Purchase Price, less the escrow Hold Back, to ISG.
(c) In addition, each of the Parties shall deliver such other and further documents as may be required pursuant to the terms of this Agreement to consummate the Transactions, including without limitation, the escrow agreement contemplated by Section 2.6, above.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
ISG, Kaufman, LKII Trust and JK Trust (individually, a "Seller" and collectively, the "Sellers"), jointly and severally, hereby represent and warrant to the Purchasers, jointly and severally, on the date hereof and on the Closing Date as follows:
4.1 Organization and Qualification
Each Seller that is an Entity is duly formed, validly existing and in good standing under the laws of its jurisdiction of formation. ISG (a) has all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted and (b) Is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the properties owned, leased or operated by it or the nature of its activities makes such qualification necessary, except where the failure to so register would not have a Business Material Adverse Effect.
4.2 Authorization and Validity of Agreement
Each of the Sellers has all requisite power and authority to enter into this Agreement and to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance by each of the Sellers of this Agreement and the consummation by each of the Sellers of the Transactions have been duly and validly authorized by all necessary actions on the part of the Sellers and/or its members. This Agreement has been duly executed and delivered by each of the Sellers, and is a legal, valid and binding obligation of each of the Sellers,enforceable against each of them in accordance with its terms,except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors' rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (c) to the extent the indemnification provisions contained herein may be limited by applicable federal or state securities laws.
4.3 Sole Owners
LKII Trust and JK Trust are the sole record and benefiCial owners of ISG. Other than Purchasers and Sellers, there are no other beneficiaries, third party or otherwise, to this Agreement or to the Transactions described in this Agreement.
4.4 Financial Statements;Books and Records;Controls and Procedures
ISG has delivered to Fusion copies of the unaudited combined balance sheets of the Business (NBS and ISG} at December 31,2009, December 31, 2010 and November 30, 2011, as well as the unaudited income statements for the years ended December 31, 2009 and 2010, and the period ended November 30, 2011 (collectively the "Unaudited Financial Statements"). The Unaudited Financial Statements have been prepared in accordance with past practices and GAPA, and such Unaudited Financial Statements are true, correct and complete, and present fairly and accurately the financial condition and positiOn of NBS, ISG and the Business as of the dates indicated. NBS and ISG maintain books and records sufficient to permit the preparation of accurate and complete financial statements for NBS, ISG and the Business; and the Unaudited Financial Statements have been prepared from the books and records of NBS, ISG and the Business.NBS and ISG maintain controls and procedures that are sufficient to enable accurate and complete financial statements to be prepared from such books and records. Sellers have no reason to believe that the Unaudited Financial Statements cannot be audited in accordance with GAAP and the rules and regulations of the SEC.
4.5 Absence of Undisclosed Liabilities
Except as set forth in Schedule 4.5 or (a) as reflected or reserved against in Unaudited Financial Statements and (b) for liabilities and obligations incurred since the date of the most recent balance sheet included in the Unaudited Financial Statements in the ordinary course of business consistent with past practice, ISG has no liabilities or obligations of any nature, whether or not accrued, absolute, contingent or otherwise, that would be required by GAAP to be reflected on a consolidated balance sheet of ISG (or in the notes thereto} other than those which would not reasonably be expected to have, individually or in the aggregate, an Business Material Adverse Effect. There is no existing condition, situation or set of circumstances (excluding possible changes in the Tax laws of any jurisdiction) that could reasonably be expected to result in any such liability, other than liabilities fully and adequately reflected or
reserved against on the Unaudited Financial Statements, or incurred since the date of the most recent balance sheet included In the Unaudited Financial Statements in the ordinary course of business consistent wilh past practice, which in the aggregate are not material to ISG or the Business. For purposes of this Section 4.5, "material" shall mean any amount in excess of
$10,000.
4.6 No Material Adverse Change
Since the date of the Unaudited Financial Statements, there have been no material changes in the assets, properties, business, operations, prospects or condition (financial or otherwise) of ISG or the Business that could reasonably be foreseen to have a Business Material Adverse Effect, nor do any of the Sellers know of any such change that is reasonably likely to occur, nor has there been any damage, destruction or loss materially and adversely affecting the assets, properties, business, operations, prospects or condition of ISG or the Business, whether or not covered by insurance.
4.7 Accounts and Notes Receivable
All accounts and notes receivable reflected in the Unaudited Financial Statements and all accounts receivable arising after the date of the most recent balance sheet included in the Unaudited Financial Statements (collectively, the "Post Balance Sheet Accounts Receivable") have arisen in the ordinary course of business, represent valid and enforceable obligations due to ISG or the Business, and are not subject to any discount, set-off or counter claim. All such Post Balance Sheet Accounts Receivable have been collected or, to the best knowledge of Sellers, are fully collectible in the ordinary course of business in the aggregate recorded amounts thereof, except as reserved in the most recent balance sheet included in the Unaudited Financial Statements.
4.8 Tax Matters
(a) ISG has timely filed or caused to be filed (taking into account any extension of time within which to file) since its inception all material Tax Returns required to have been filed by it and all such Tax Returns are true, correct and complete. ISG has paid all Taxes that have or may have become due pursuant to those Tax Returns or otherwise or pursuant to any assessment received by ISG.
(b) For federal and state income tax purposes, JSG is an LLC which is treated as an S Corporation, and its income or loss is included in the income tax returns of the members of ISG, according to their respective interests. The United States federal and state income tax returns of the members of ISG have never been audited by the IRS or relevant state tax authorities, insofar as they include income or loss attributed to ISG, nor are they the subject of any pending audit.
(c) All material amounts of Taxes that ISG is required by law to withhold or collect have been duly withheld or collected, and have been timely paid over to the proper governmental authorities to the extent due and payable.
(d) ISG has not been delinquent in the payment of any material Tax that has not been accrued for in the Unaudited Financial Statements for the period for which such Tax relates nor is there any material Tax deficiency outstanding, proposed, or assessed against ISG
or the Business, nor has ISG executed any unexpired waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.
(e) ISG has not incurred any liability for Taxes since the date of the most recent balance sheet included in the Unaudited Financial Statements other than in the ordinary course of business consistent with past practice.
(f) ISG has not received written notice from any Governmental Entity that a deficiency, delinquency, claim, audit, suit, proceeding, request for information or investigation is now pending, outstanding or, to the knowledge of any Seller, threatened against or with respect to ISG, the Business or Taxes. There are no Liens for Taxes on any of the assets of ISG. Within the preceding four years, no claim has been made in writing by a Governmental Entity of a jurisdiction where ISG has not filed Tax Returns that ISG is or may be subject to taxation by that jurisdiction.
(g) ISG (i) is not a party to or bound by any Tax allocation, indemnification, sharing or similar agreement or owes any amount under any such agreement or arrangement (excluding customary agreements to indemnify lenders in respect of Taxes and customary indemnity provisions in agreements for the acquisition or divestiture of assets) or (ii) is or could be liable for any Tax of any person under Section 1.1502-6 of the Treasury regulations promulgated under the Internal Revenue Code of 1986, as amended (the "Code") (or any similar provision of
. state,local or foreign Law) by virtue of membership in any affiliated, consolidated, combined or unitary group (other than a group the common parent of which was Parent), or as a transferee or successor, or by contract.
(h) ISG (i) has not filed any extension of time within which to file any Tax Returns that have not been filed (except for extensions of time to file Tax Returns other than income Tax Returns or gross receipts Tax Returns, which extensions were obtained in the ordinary course), (ii) has not granted any power of attorney that is in force with respect to any matters relating to any Taxes, (iii) has not proposed to enter into an agreement relating to Taxes with a Governmental Entity,which proposal is pending or (iv) has not, since December 31, 2007, been issued any private letter ruling, technical advice memorandum or other similar agreement or ruling from a Govemmental Entity with respect to Taxes.
4.9 No Approvals or Notices Required; No Conflict with Instruments
The execution,delivery and performance of this Agreement and the Transactions by any of the Sellers will not contravene or violate (a) any existing law, rule or regulation to which any of the Sellers are subject, (b) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which Is applicable to any of the Sellers, or (c) the Certificate of Organization or By Laws of the Company; nor will such execution, delivery or performance violate, be in conflict with or result in the breach (with or without the giving of notice or lapse of time, or both) of any term, condition or provision of, or require the consent of any other party to, any mortgage, indenture, agreement, contract, commitment, lease, plan or other instrument, document or understanding, oral or written, to which the Company is a party or by which the Company is otherwise bound. Except as set forth on Schedule 4.9, no authorization, approval or consent, and no registration or filing with, any governmental or regulatory official, body or authority is required in connection with the execution, delivery and performance of this Agreement by any of the Sellers.
4.10 Legal Proceedings
Except as set forth in Schedule 4.10, there is no (a} Legal Proceeding pending, or to the knowledge of any Seller threatened, against,involving or affecting any of the Sellers or any of their respective assets or rights; (b) judgment, decree, Injunction, rule, or order of any Governmental Entity applicable to the that has had or is reasonably likely to have, either individually or in the aggregate, a Business Material Adverse Effect; (c) Legal Proceeding pending or threatened, against any of the Sellers that seeks to restrain, enjoin or delay the consummation of this Agreement or any of the other Transactions or that seeks damages in connection therewith; or (d) Injunction, of any type. For the avoidance of any doubt, Fusion, Newco and each of their respective shareholders, board of directors, officers. employees, agents or attorneys (each an Indemnifier Party"), are hereby indemnifier by each of the Sellers from and against any and all claims, liabilities, obligations, costs and attorneys' fees and held harmless in the event of the inaccuracy of the representation and warranty contained in this Section. This provision is in addition to any other remedy available to Purchasers and shall survive Closing for a period of two (2) years.
4.11 Licenses; Compliance with Regulatory Requirements.
(a) ISG and the Business are and have been in compliance with,and not in default under or in violation of, any applicable federal, state, local or foreign law, statute, ordinance, rule, regulation, judgment, order, injunction, decree or agency requirement of any Governmental Entity (collectively, "Laws" and each, a "Law"), except where such non-compliance, default or violation would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect. Within the past three years, ISG has not received any written notice or, to the knowledge of any Seller,other communication from any Governmental Entity regarding any actual or possible violation of, or failure to comply with, any Law, except as would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect.
(b) Except as set forth on Schedule 4.11(b), ISG and the Business rein possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals, clearances, permissions, qualifications and registrations and orders of any Governmental Entity, and all rights under any material contract with any Governmental Entity, necessary for ISG to own, lease and operate its properties and assets or to carry on its Business as it is now being conducted (the "ISG Permits"), except where the failure to have any ISG Permits would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect. All ISG Permits are valid and in full force and effect, except where the failure to be In full force and effect would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect. ISG and the Business are in compliance In all respects with the terms and requirements of such ISG Permits, except where the failure to be in compliance would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect.
4.12 Brokers or Finders
Other than Jerry Salvi, no agent, broker, investment banker, financial advisor or other entity is, will, or might be entitled, by reason of any agreement. act or statement by any of the Sellers, or any of their respective officers, employees, consultants or agents, to any financial advisory, broker's, finder's or similar fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the Transactions, and each of the
Sellers agrees to pay all financial advisory, broker's, finder's or similar fee or commission owed to Jerry Salvi upon Closing, and to indemnify and hold each of the Purchasers harmless from and against any and all claims, liabilities or obligations with respect to any fees, commissions. expenses or claims for indemnification or contribution asserted by any person or Entity on the basis of any act or statement made or alleged to have been made by any of the Sellers or any of their respective officers, employees, consultants or agents.
4.13 Employment Agreements
There are no written employment agreements covering any employee(s) of lSG or the
Business.
4.14 Background of Kaufman
There are no civil, criminal, or regulatory infirmities or disqualifications in the backgrounds of Kaufman and/or Russell Markman that would require public disclosure in Fusion's filings with, and in accordance with the rules and regulations of, the SEC applicable to public disclosure relating to officers and/or directors of public companies.
4.15 Leasehold Interests
(a) ISG does not own. any real property.
(b) Except as would not reasonably be expected to have. individually or in the aggregate, a Business Material Adverse Effect, (i) each material lease and sublease (collectively, the company Real Property. Leases"} under which ISG or the Business uses or occupies or has the right to use or occupy any material real property (the "company leased Real Property") at which the material operations of ISG or the Business are conducted as of the date hereof, is valid, binding and in full force and effect, (ii) neither ISG nor the Business is currently subleasing, licensing or otherwise granting any person the right to use or occupy a material portion of a Company Leased Real Property that would reasonably be expected to materially and adversely affect the existing use of the Company Leased Real Property by the Company in the operation of its business in the ordinary course thereon and (iii) ISG has not
received written notice of any uncured default of a material nature on the part of ISG or the
Business or, to the knowledge of Sellers, the landlord thereunder, with respect to any Company
Real Property Lease, and to the knowledge of Sellers no event has occurred or circumstance exists which, with the giving of notice, the passage of time, or both.would constitute a material breach or default under a Company Real Property Lease. Except as would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect, ISG has a good and valid leasehold interest, subject to the terms of the Company Real Property Leases, in each parcel of Company leased Real Property, free and clear of all Liens, encroachment, easements, rights-of-way, restrictions and other encumbrances that do not materially and adversely affect the existing use of the real property subject thereto by the owner (or lessee to the extent a leased property) thereof in the operation of its business in the ordinary course. As of the date hereof and the Closing Date, neither ISG nor the Business has received written notice of any pending, and, to the knowledge of the Sellers, there is no threatened, condemnation proceeding with respect to any Company Leased Real Properly, except such proceeding which would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect.
4.16 Title to Assets; Liens
Except as set forth on Schedule 4.16, ISG and/or NBS has good, valid and marketable title to the assets used in the Business, free and clear of all liens. There are no developments. pending or threatened, affecting any of the Assets of ISG that might materially detract from their value, materially interfere with any present or intended use of such assets and/or impair the value of the Transactions to Purchasers.
4.17 Employees
Set forth on Schedule 4.17, as may be updated to and including the Closing Date, is a complete list of the employees of ISG and/or the Business.Except as set forth in Schedule 4.17, the Company is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them to the date hereof, or for amounts reimbursable to such employees.
4.18 Membership Interests
ISG is authorized to issue membership interests in the amount currently issued and outstanding. The issued and outstanding membership interests in ISG have been duly and validly authorized and issued and are fully paid and non-assessable and were"not issued in violation of the preemptive or similar rights of any person. The membership interests in ISG are owned by the persons and in the relative percentages set forth on Schedule A hereto.There are no options, warrants or other securities exercisable or convertible into membership interests of ISG and ISG has not entered into any agreement or understanding to do so.
4.19 Employee Benefit Plans
(a) Schedule 4.19 lists all material compensation or employee benefit plans, programs, policies, agreements, arrangements, or other "employee benefit plans" (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), as well as all other arrangements not subject to ERISA, providing cash- or equity based Incentives, health, medical, dental. disability, accident or life Insurance benefits or vacation, severance, retention, change in control, retirement, pension or savings benefits, that are sponsored, maintained or contributed to by ISG or the Business or are for the benefit of current or former employees or directors of ISG or the Business or any other entity which would be aggregated with the Company and treated as the same employer under Code Section 414(b) or (c) (an "ERISA Affiliate") (the "Company Benefit Plans") or under which ISG, the Business or any ERISA Affiliate may have liability.
(b) Each Company Benefit Plan has been maintained, operated and administered in all material respects in accordance with its terms and all applicable Laws, including ERISA and the Code. Each Company Benefit Plan intended to be "qualified" within the meaning of Section 401{a) of the Code is the subject of a favorable determination letter from the Internal Revenue Service as to Its qualification or, if no such determination has been made, an application for such determination is pending with the Internal Revenue Service and, to the Company's knowledge, no event has occurred that would reasonably be expected to result in the disqualification of such Company Benefit Plan.
(c) No Employee Plan constitutes (i) a multiemployer plan,as defined in Section 3(37) or 4001(a)(3) of ERISA, {il) a "defined benefit plan: as defined in Section 3(35), (iii) any other plan subject to Title IV of ERISA. No liability under Title IV of ERISA has been incurred by ISG or the Business that has not been satisfied in full when due, and, to the knowledge of any of the Sellers, other than routine claims for benefits, no condition exists that could reasonably be expected to result in a material liability to ISG or the Business under Title IV of ERISA. Full payment has been made of all amounts which /SG, the Business or any ERISA Affiliate is required to have paid as contributions to or benefits under any Company Benefit Plan as of the end of the most recent plan year thereof and there are no unfunded obligations under any Company Benefit Plan that have not been disclosed in writing prior to the Closing. All contributions and contribution obligations have been reflected on the Unaudited Financial Statements.
(d) Consummation of the Transactions will not (i) entitle any current or former employee, consultant, officer or director of ISG or the Business to severance, retention or change in control pay, unemployment compensation or any other payment or (ii) accelerate the time of payment or vesting, or increase the amount, of compensation due any such current or former employee, consultant, officer or director.
(e) There are no material pending or, to the knowledge of any Seller, threatened claims against, by or on behalf of, or any liens filed against or with respect to. any of the Company Benefit Plans or otherwise involving any Company Benefit Plan.
(f) Neither ISG nor the Business is a party to any agreement, contract or arrangement that could result, separately or in the aggregate, in the payment of (a) any excess parachute payments within the meaning of Section 280G of the Code, or (b) ally amount that will not be fully deductible as a result of Section 162(m) (or any corresponding provision of state, local or foreign tax law).
(g) No Company Benefit Plan provides benefits, including death or medical benefits (whether or not insured), with respect to current or former employees or managers of ISG beyond their retirement or other termination of service, other than (i) coverage mandated solely by applicable l..aw, (ii) death benefits or retirement benefits under any "employee pension benefit plan(as defined in Section 3(2) of ERISA), (iii) deferred compensation benefits accrued as liabilities on the books of ISG or (iv) benefits the full costs of which are borne by the current or former employee or director or his or her beneficiary.
(h) Except as required by Section 490BB of the Code and Title I, Part 6 of ERISA, there is no liability in respect of or any obligation to provide post-retirement health and medical benefits for retired or former employees of ISG or the Business. After the performance of any or all Transactions, the Parent shall be responsible for providing continuation coverage required under Section 4980B of the Code and Title I, Part 6 of ERISA to all former employees of ISG or the Business who terminated employment on or before such date and to all persons who are considered M&A qualified beneficiaries" as defined under Tress. Reg. Section 54.49808-9 in connection with this transaction.
(i) Neither ISG, the Business nor any ERISA Affiliate has,since October 3, 2004, (i) granted to any Person an interest in a nonqualified deferred compensation plan (as defined in Code Section 409A(d)(1)), which interest has been or, upon lapse of a substantial risk of forfeiture with respect to such interest, will be subject to the tax imposed by Code Section 409A(a)(1)(B) or (b)(4)(A), or (ii) modified the terms of any nonqualified deferred compensation plan in a manner that would cause an interest previously granted under such plan to become subject to the taxes imposed by Code Section 409A. Further, no Person had a legally binding right to an amount under a nonqualified deferred compensation plan of ISG, the Business or any ERISA Affiliate prior to January 1, 2005 that is subject to a substantial risk of forfeiture or a requirement to perform future services after December 31, 2004, which would subject such Person to the taxes Imposed by Code Section 409A.
4.20 Employment and Labor Matters
(a) As of the date of this Agreement: (i) neither ISG nor the Business is a party to or bound by any collective bargaining agreement, work rules or other agreement with any labor union, labor organization, employee association, or works council (each, a "Union") applicable to employees of ISG or the Business ("Company Employees"}, (ii) none of the Company Employees Is represented by any Union with respect to his or her employment with the Company other Business, (iii) to the Sellers' knowledge, within the past three years, no Union has attempted to organize employees at ISG or the Business or filed a petition with the National Labor Relations Board seeking to be certified as the bargaining representative of any Company Employees, (iv) within the past three years, there have been no actual or, to the Sellers' knowledge, threatened (A) work stoppages, lock-outs or strikes, (B) slowdowns. boycotts, handbilling, picketing, walkouts, demonstrations, leafleting, sit-ins or sick-outs by Company Employees, causing significant disruption to the operations of a facility or (C} other form of Union disruption at lSG or the Business and (v) except as would not reasonably be expected to have. individually or in the aggregate, a Business Material Adverse Effect, there is no unfair labor practice, labor dispute or labor arbitration proceeding pending or, to the knowledge of.the Sellers, threatened with respect to Company Employees.
(b) Except for such matters that would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect: (i) ISG and the Business are, and within the past three years have been, in compliance with all applicable state, federa,l and local Laws respecting labor and employment, including all Laws relating to discrimination, disability, labor relations, unfair labor practices, hours of work, payment of wages, employee benefits, retirement benefits, compensation, immigration, workers' compensation, working conditions, occupational safety and health, family and medical leave.reductions in force, plant closings, notification of employees, and employee terminations and (ii) neither ISG nor the Business has any liabilities under the Worker Adjustment and Retraining Notification Act (the "WARN Act"} or any slate or local Laws requiring notice with respect to such layoffs or terminations.
(c) To the knowledge of the Sellers, in the past three years, (i) no Governmental Entity has threatened or initiated any material complaints, charges, lawsuits, grievances,claims, arbitrations,administrative proceedings or other proceeding(s) or investigation(s) with respect to ISG or the Business arising out of, in connection with, or otherwise relating to any Company Employees or any Laws governing labor or employment and (ii} no Governmental Entity has issued or, to the Sellers' knowledge, threatened to issue any significant citation, order, judgment, fine or decree against ISG or the Business with respect to any Company Employees or any Laws governing labor or employment.
(d) The execution of this Agreement and the consummation of the Transactions will not result in any material breach or violation of,or cause any payment to be made under, any collective bargaining agreement, employment agreement. consulting agreement or any other employment-related agreement to which the Company or the Business is a party.
4.21 Environmental Laws and Regulations
(a)
Except as would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect:
(i)
there is no pending or, to the knowledge of the Sellers, threatened in writing, claim, lawsuit, investigation or administrative proceeding against ISG or the Business, under or pursuant to any Environmental Law, and neither ISG nor the Business has received written notice from any person, including any Governmental Entity, (A) alleging that ISG or the Business has been or is in violation or potentially in violation of any applicable Environmental Law or otherwise may be liable under any applicable Environmental law, which violation or liability is unresolved or (B) requesting information with respect to matters that could result In a claim of liability pursuant to applicable Environmental Law;
(ii)
ISG and the Business are and have been in compliance with all applicable Environmental laws and with all permits, licenses and approvals required under Environmental Laws for the conduct of their business or the operation of their facilities;
(iii) ISG and the Business have all permits, licenses and approvals required for the operation of the businesses and the operation of their facilities pursuant to applicable Environmental Law, all such permits, licenses and ..approvals are in effect, and, to the knowledge of the Sellers.there is no actual or alleged proceeding to revoke, modify or terminate such permits, licenses and approv ls;
(iv) to the knowledge of the Sellers, there has been no release of Hazardous Materials at any real property currently or formerly owned, leased or operated by ISG or the Business in concentrations or under conditions or circumstances that (A) would reasonably be expected to result in liability to the ISG or the Business under any Environmental Laws or (B) would require reporting, investigation, remediation or other corrective or response action.by ISG or the Business under any Environmental .Law and that has not otherwise been addressed through such reporting, investigation, remediation or other corrective or responsive action by ISG or the Business; and
(v)
Neither ISG nor the Business is party to any order, judgment or decree that imposes any obligations under any Environmental Law and, to the knowledge of the Sellers, has not, either expressly or by operation of Law, undertaken any such obligations, including any obligation for corrective or remedial action, of any other person.
(b)
As used in this Agreement:
(i)
"Environment" means the indoor and outdoor environment, including any ambient air, surface water, drinking water, groundwater, land surface (whether below or above water), subsurface strata, sediment, building, surface, plant or animallife and natural resources.
(ii)
"Environmental law" means any Law or any binding agreement issued or entered by or with any governmental Entity relating to: (A) the protection of the Environment, including pollution, contamination, cleanup, preservation, protection and reclamation of the Environment; (B) any exposure to or release or threatened release of any Hazardous Materials, including investigation, assessment, testing, monitoring, containment, removal, remediation and cleanup of any such release or threatened release; (C) the management of any Hazardous Materials, including the use, labeling, processing, disposal, storage, treatment, transport or
recycling of any Hazardous Materials and recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials; or (D) the presence of Hazardous Materials in any building, physical structure, product or fixture.
(iii) "Hazardous Materials" means all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, or defined as such by, or regulated as such under, any Environmental Law, including any regulated pollutant or contaminant (including any constituent, product or by-product thereof), petroleum, asbestos or asbestos-containing material, polychlorinated biphenyls, lead paint, any hazardous, industrial or solid waste, and any toxic, radioactive, infectious or hazardous substance, material or agent.
4.22 Personal Property
Except as set forth on Schedule 4.22 and as would not reasonably be expected to have, individually or in the aggregate, a Business Material Adverse Effect, ISG has good title to,or a valid and binding leasehold interest in, the Assets and all the personalproperty owned by it, free and clear of all Liens.
4.23 Insurance
Except for failures to maintain insurance that, individually or in the aggregate, have not had and would not reasonably be expected to have a Business Material Adverse Effect:
(a)
ISG maintains insurance coverage with reputable and financially sound insurers, or maintains self-insurance practices, in such amounts and covering such risks associated with the Business as are in accordance with customary industry practice for companies engaged in businesses similar to that of ISG and the Business; and
(b)
each of the insurance policies covering ISG and/or the Business (the "Insurance Policies") is in full force and effect, all premiums due thereon have been paid in full and ISG is in compliance in all material respects with the terms and conditions of such insurance policies.
4.24 Intellectual Property
(a)
Schedule 4.24 contains a true and complete list, as of the date hereof, of all Intellectual Property rights to which ISG or the Business has an interest that are the subject of any issuance, registration, certificate, application or other filing by, to, or with any governmental Authority or authorized private registrar, including registered trademarks, registered copyrights, issued patents, domain name registrations, and pending applications for any of the property rights described in the first sentence of the following subsection ("Company lntellectual Property Rights"), and any material unregistered Company Intellectual Property Rights.
(b)
Except as would not,individually or in the aggregate, reasonably be expected to have a Business Material Adverse Effect, ISG owns or has a valid right to use all patents,trademarks,trade names,service marks,domain names,copyrights and any applications and registrations therefor, trade secrets,know-how and computer software (collectively,"Intellectual Property Rights") used in connection with and reasonably necessary for the Business as currently conducted. To the knowledge of the Sellers,neither ISG nor the Business has infringed, misappropriated or violated in any material respect any Intellectual Property Rights of any third party except where such infringement, misappropriation or violation would not,individually or in the aggregate, reasonably be expected to have a Business Material Adverse Effect.To the knowledge of the Sellers,no third party is infringing, misappropriating or violating any Intellectual Property Rights owned or exclusively licensed by ISG or the Business.
4.25 Material Contracts
Except as set forth in Schedule 4.25, as of the date hereof and the Closing Date, neither ISG nor the Business is a party to or bound by any Contract that (i) is a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K promulgated by the SEC), (ii) would, after giving effect to the Transactions, limit or restrict ISG or the Business or any successor thereto, from engaging or competing in any line of business or in any geographic area that it currently engages in or that contains exclusivity or non-solicitation provisions with respect to customers, (iii) limits or otherwise restricts the ability of ISG to pay dividends or make distributions to its stockholders or (iv) provides for the operation or management of any operating assets of ISG or the Business by any person other than ISG or ISG (except as contemplated by this Agreement). Each Contract of the type described in this Section 4.25, whether or not set forth on Schedule 4.25 is referred to herein as a "Company Material Contrace In addition, any Contract that provides for the payment of $10,000 or mpre, over the term of the Contract, shall be considered a Company Material Contract. Each Company Material Contract is a valid and binding obligation of ISG or the Business enforceable against it and, to the knowledge of the Sellers, each other party thereto, in accordance with its terms (except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, .reorganization, moratorium or other similar Laws, now or hereafter in effect, relating to creditors' rights generally and (ii) equitable remedies of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought) and, is in full force and effect, and ISG has performed in all material respects all obligations required to be performed by it to the date hereof under each Company Material Contract and, to the knowledge of the Sellers, each other party to each Company Material Contract has performed in all material respects all obligations required to be performed by it under such Company Material Contract, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Business Material Adverse Effect. None of the Sellers has knowledge of, or has received written notice of, any violation of or default under (or any condition which with the passage of time or the giving of written notice would cause such a violation of or default under) any Company Material Contract to which it is a party or by which it or any of its properties or assets is bound, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to have a Business Material Adverse Effect.
4.26 Provided Information
All written information concerning ISG and the Business that has been prepared by or on behalf of ISG and that has been or will be provided to Purchasers in connection with this Agreement or the Transactions, was or will be, at the time made available, correct in all material respects and did not, at the time made available, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statements were made.
4.27 Accuracy of Disclosure
As of the date hereof and as of the date of Closing, the representations and warranties of each of the Sellers herein, the Schedules hereto, all documents and other papers listed therein or required to be delivered pursuant to this Agreement, and all due diligence materials provided by or on behalf of any or all of the Sellers are and shall be true, complete, correct and
authentic. No representation or warranty of any of the Sellers contained in this Agreement, and,
no document furnished by or on behalf of any of the Sellers pursuant to this Agreement or in connection with the Transactions, contains or will contain an untrue statement of a material fact or omits or will omit to state a material fact required to be stated therein or necessary to make
the statements made, in the context in which made, not false or misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FUSION
Each of the Purchasers, jointly and severally, hereby represents and warrants to each of the Sellers as follows:
5.1 Organization and Qualification
Each of the Purchasers is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, and is duly qualified or licensed and is in good standing to do business in each jurisdiction in which the properties owned, leased or operated by it or the nature of its activities makes such qualification necessary, except where the failure to so register would not have a Fusion Material Adverse Effect
5.2 Authorization and Validity of Agreement
Each of the Purchasers has all requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance by each of the Purchasers of this Agreement and the consummation of the Transactions have been duly and validly authorized by all necessary corporate action on the part of each of the Purchasers. This Agreement has been duly executed and delivered by each of the Purchasers and is a legal, valid and binding obligation of each of the Purchasers enforceable against it in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors' rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (c) to the extent the indemnification provisions contained herein may be limited by applicable federal or state securities laws.
5.3 Brokers or Finders
No agent, broker, investment banker, financial advisor or other entity is or will be entitled, by reason of any agreement, act or statement by Purchasers or their respective officers, employees, consultants or agents, to any financial advisory, broker's, finder's or similar fee or commission. to reimbursement of expenses or to indemnification or contribution in connection with any of the Transactions, and each of the Purchasers hereby indemnify and hold
each of the Sellers harmless from and against any and all claims, liabilities or obligations with respect to any such fees, commissions, expenses or claims for indemnification or contribution asserted by any entity on the basis of any act or statement made or alleged to have been made by the Purchasers or their respective officers, employees. consultants or agents.
5.4 No Approvals or Notices Required; No Conflict with Instruments
The execution, delivery and performance of this Agreement and the related agreements by each of the Purchasers will not contravene or violate (a) any existing law, rule or regulation to which either of them is subject, (b) any judgment, order, writ, injunction, decree or award of any court. arbitrator or governmental or regulatory official, body or authority which is applicable to either of the Purchasers, or (c) the Certificate of Incorporation or By Laws of either of the Purchasers; nor will such execution, delivery or performance violate, be in conflict with or result in the breach (with or without the giving of notice or lapse of time. or both) of any term, condition or provision of, or require the consent of any other party to, any mortgage, indenture, agreement, contract, commitment, lease, plan or other instrument, document or understanding, oral or written, to which either of the Purchasers is a party or by which either of the Purchasers is otherwise bound. Except as set forth on Schedule 5.4, no authorization, approval or consent, and no registration or filing with, any governmental or regulatory official, body or authority Is required in connection with the execution, delivery and performance of this Agreement by either of the Purchasers.
5.5 Legal Proceedings
Except as set forth in Schedule 5.5, there is no (a) Legal Proceeding pending or threatened, against, involving or affecting either of the Purchasers or any of their respective assets or rights; (b) judgment, decree, injunction, rule, or order of any Governmental Entity applicable to the that has had or is reasonably likely to have, either individually or in the aggregate, a Fusion Material Adverse Effect; (c) Legal Proceeding pending or threatened against either of the Purchasers that seeks to restrain, enjoin or delay the consummation of this Agreement or any of the other Transactions or that seeks damages in connection therewith; or (d) injunction,of any type. For the avoidance of any doubt, each of the Sellers and each of their respective shareholders, board of directors, officers, employees, agents or attorneys (each an "Indemnified Partyw), are hereby indemnified by each of the Purchasers from and against any and all claims, liabilities, obligations, costs and attorneys' fees and held harmless in the event a Legal Proceeding is pending or threatened against any Indemnified Party. This section shall survive Closing for a period of two (2) years.
5.8 Accuracy of Disclosure
As of the date hereof and as of the date of Closing, the representations and warranties of each of the Purchasers herein, the Schedules hereto, all documents and other papers listed therein or required to be delivered pursuant to this Agreement, and all due diligence materials provided by or on behalf of each of the Purchasers are and shall be true, complete, correct and authentic. No representation or warranty of Purchasers contained in this Agreement, and, no document furnished by or on behalf of either or both of them pursuant to this Agreement or in connection with the Transactions, contains or will contain an untrue statement of a material fact or omits or will omil to state a material fact required to be stated therein or necessary lo make the statements made, in the context in which made, not false or misleading.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 Confidentiality
(a)
Unless otherwise agreed to in writing by the Party disclosing the same (a "Disclosing Party"), each party (a "Receiving Party") will, and will cause its officers, directors, employees, and agents (collectively referred to as such party's "Representatives") to, (i) keep all Confidential Information (as defined below) of the disclosing party in strict confidence and not disclose or reveal any such Confidential Information to any person or Entity other than those Representatives of the receiving party who are participating in effecting the Transactions or who otherwise need to know such Confidential Information, (ii) use such Confidential Information only in connection with consummating the Transactions and enforcing the Receiving Party's rights hereunder, and (iii) not use Confidential Information in any manner detrimental to the Disclosing Party. In the event that a Receiving Party is requested pursuant to, or required by, applicable law or regulation or by legal process to disclose any Confidential Information of the Disclosing Party. the Receiving Party will provide the Disclosing Party with prompt notice of such request(s) to enable the Disclosing Party to seek an appropriate protective order.
(b)
A Party's obligations hereunder will not apply with respect to Confidential Information that (i) is disclosed to a third party with the Disclosing Party's written approval.(ii) is required to be produced under order of a court of competent jurisdiction or other similar requirements of a governmental agency, or (iii) is required to be disclosed by applicable law or regulation.If a receiving party uses a degree of care to prevent disclosure of the Confidential Information that is at least as great as the care it normally takes to preserve its own information of a similar nature,it wlI not be liable for any disclosure that occurs despite the exercise of that degree of care, and in no event will a Receiving Party be liable ror any indirect, punitive, special or consequential damages. In the event this Agreement is tenninated, each party will, if so requested by the other party, promptly return or destroy all of the Confidential information of such other party, including all copies, reproductions, summaries,analyses or extracts thereof or based thereon In the possession of the receiving party or its Representatives.
(c)
For purposes of this Section 6.1,"Confidential Information" of a party means all conrldential or proprietary information about such party that is furnished by it or its Representatives to the other party or the other party's Representatives, regardless of the manner in which it is furnished.Confidential Information does not include,however,information which (i) has been or in the future is published or is now or in the future is otherwise in the public domain through no fault of the Receiving Party or its Representatives or is otherwise required to be disclosed by law; (ii) was available to the Receiving Party or its Representatives on a non-confidential basis prior to Its disclosure by the Disclosing Party;(iii) becomes available to the Receiving Party or its Representatives on a non-confidential basis from a person or Entity other than the Disclosing Party or its Representatives who is not other Wise bound by a confidentiality agreement with the Disclosing Party or its Representatives,or is not otherwise prohibited from transmitting the information to the Receiving Party or its Representatives,or (iv) is independently developed by the Receiving Party or its Representatives through persons who have not had, either directly or indirectly, access to or knowledge of such information. Nothing contained in this Section 6.1 shall be construed to limit a Receiving Party's right to independently develop or acquire products without use of the Disclosing Party's Confidential Information.
(d)
Except as contemplated herein, or as may be required by applicable law, no announcement or disclosure of this transaction, or matters related to this transaction, shall be made by either Party without the prior written approval of the other Party; provided, however, that nothing in the foregoing shall restrict Fusion from making such disclosures as it reasonably deems necessary to comply with its reporting obligations under the Exchange Act.
(e)
All prior agreements between the parties concerning or relating to non-disclosure, confidentiality, or non-solicitation, including but not limited to the Non-Disclosure Agreement previously signed by the Parties, shall remain in full force and effect.
6.2 Cooperation Pending Closing.
From the Effective Date of this Agreement through the Closing, and with a view towards consummation of the Transactions and a smooth transition of managerial and supervisory functions following the Closing, Sellers agree to (a) discuss with Purchasers material operational decisions relating to the Business,(b)consider the advice and recommendations of Purchasers with respect to those decisions,(c) allow Purchasers and their representatives access to the Business with a view towards familiarizing themselves with day-to day operations,(d) maintain books and records of the Business in accordance with GAAP,(e) provide Purchasers with regular financial statements and access to the books and records of the Business, and (f) provide Purchasers with operational and managerial reports conceming the Business as may reasonably be requested by Purchasers.
6.3 Operation of the Business
Notwithstanding the preceding Section 6.2, and except as provided otherwise herein, during the period between the Effective Date and Closing,or if applicable the termination of his Agreement as provided herein, ISG shall at a minimum continue to operate its Business in the ordinary course consistent with past practice and shall not, without the prior written consent of Purchasers:
(a)
Sell lease, assign, transfer or otherwise dispose of any of its material assets.
(b)
Make any material capital business expenditures.
(c)
Create, incur,assume or suffer to exist, any business related mortgage, pledge, lien, charge, security interest or encumbrance of any kind upon any of its property,assets, income, or profits, whether now owned or hereafter acquired.
(d)
Borrow funds.
(e)
Sell, assign, convey or transfer any assets material to ISG or the Business other than inventory or other assets held for resale in lhe ordinary course of business.
(f)
Issue, redeem, or repurchase any equity or debt securities.
(g)
Amend its Articles of Organization or Operating Agreement.
(h)
Enter into any agreement to do any of the foregoing.
(i)
Take any action that could reasonably be foreseen to diminish the value of the
Business, or could result in a Business Material Adverse Effect.
6.4 Organizational lntegration
Following the Effective Date and prior to Closing, the Parties shall work together in good faith to develop effective plans for the integration of the organizations of NBS, the Business,and Purchasers into a common organization (the "Integration Plan"), which Integration Plan shall not be implemented until Closing, unless otherwise agreed to by the Parties. Furthermore, the Integration Plan shall be considered Confidential Information within the meaning of Section 6.1 above. Immediately after Closing, all personnel included in the Integration Plan shall become direct or indirect employees of Fusion, and shall thereafter be entitled to such compensation and benefits as are typically accorded to similarly situated employees of Fusion or as may otherwise be dictated by this Agreement. Purchasers shall advise Sellers at least 30 days prior to Closing of any employee(s) of the Business who are not included in the Integration Plan and who, therefore, will not be retained following Closing. Nothing in the foregoing shall guarantee any employee of the Business continued employment following the Closing, and Purchasers reserve the right to make all decisions affecting personnel of the Business from and after the Closing.
6.5 Employment of Kaufman
At the Closing, Kaufman shall enter into an Employment Agreement to the extent provided in the NBS Purchase Agreement.
6.6 No Solicitation or Acceptance of Proposals
Commencing upon the Effective Date and continuing until the Closing of the transaction,none of the Sellers,including their respective directors,officers,employees, representatives, members, managers,or other agents,shall, directly or Indirectly, enter into any discussion with, solicit or entertain offers from, negotiate with or in any manner encourage,discuss,accept or consider any proposal from any person or Entity other than Purchasers relating to the purchase or sale of the Business, the equity or assets of NBS or ISG and/or any interest therein (a "Proposal").Each of the Sellers shall immediately cease and suspend any existing activities, discussions, or negotiations with any person or Entity (other than Purchasers) conducted heretofore with respect to any Proposal.Sellers shall immediately advise Fusion of the identily of any person or Entity who submits any Proposal or other communication regarding a Proposal. and provide Fusion with a copy of the submission.
6.7 Due Diligence
Closing of the transaction shall be subject to the satisfactory completion of due diligence by Purchasers. Purchasers shall commence its due diligence promptly following execution of this Agreement. Sellers shall provide Purchasers and their representatives with access to the facilities, management, books and records of ISG and the Business at all reasonable times upon reasonable notice; and Purchasers agree to conduct due diligence in such a manner as to cause as little interference with the operation of the Business as is practicable. In the event that Purchasers determine not to proceed with the Transactions, and therefore to terminate this Purchase Agreement based upon its due diligence review, Purchasers shall so notify Sellers within lhree (3) business days of any such determination, whereupon this Purchase Agreement shall cease to be of further force or effect except as hereinafter sal forth. In the event
Purchasers have not terminated this Agreement under this Section 6.7 prior to the later of April
30, 2012 or delivery of the Audit (as hereinafter defined) (such later date being referred to as the "Outside Date"), Purchasers shall have no further right to terminate this Agreement under this Section 6.7; it being understood, however, that this provision shall not alter Purchaser's right to terminate this Agreement in the event of a Business Material Adverse Effect or otherwise under Section 9.1.
6.8 Audit of Books and Records
Closing of the Transactions shall be subject to the completion and delivery to Purchasers of an audit (the "Audit") of the financial statements of NBS, ISG and the Business, to the extent required by and under the applicable rules and regulations of the SEC (the "Audited Financial Statements"), by an audit firm acceptable to Purchasers and their professional advisors, in their sole discretion. Sellers shall use their best efforts to reasonably cooperate with its audit firm and Purchasers in the conduct of the Audit. The Parties agree to use their best efforts to cause the Audit to be completed on or before April 30, 2012, subject to an automatic extension to May 31, 2012, if necessary (as may be further extended by mutual consent of the Parties, the "Audit Due Date"). Purchasers may terminate this Agreement within ten (10) business days following receipt of the Audited Financial Statements in the event that (a) the Audited Financial Statements are determined by Fusion's auditors not to be in compliance with GAAP and/or the rules and regulations of the SEC applicable to Fusion, (b) the filing of such Audited Financial Statements with the SEC could cause Fusion to be out of compliance with its obligations under Federal securities laws and/or (c) the financial condition and results of operations reported in the Audited Financial Statements are materially and adversely different from the financial condition or results of operations reported in the Unaudited Financial Statements. The Parties' obligations to pay the fees and expenses of the Audit.are set forth in Section 10.2 below.
6.9 Regulatory Approvals
Closing of the Transactions shall be subject to the Parties obtaining all required regulatory approvals to enable Purchasers to own and operate the Business post-Closing. The Parties shall cooperate and work together to obtain such regulatory approvals and to transfer all transferable licenses to Fusion and/or Newco or their affiliates, as appropriate.Each Party shall comply with all reasonable requests or the other Party that are necessary to obtain such regulatory approvals and/or to transfer licenses. The Parties' obligations to pay the fees and expenses of the regulatory approvals process are set forth in Section 10.2 below.
6.10 Third-Party Consents
Closing of the Transactions shall be subject to the Parties' obtaining all required approvals for the assignment to Nawco and/or Fusion, as necessary, of agreements, contracts, commitments, leases, licenses, permits, or other authorizations that may not be assigned without the consent of a third party ("Third Party Consents"). Each Party shall comply with all reasonable requests of the other Party, which are necessary to obtain such Third-Party Consents.
6.11 Commercially Reasonable Efforts
Each Party shall use its respective commercially reasonable efforts to satisfy all conditions necessary for the completion of due diligence, the completion of the Audit, the
obtaining of the regulatory approvals, the obtaining of third-party consents, satisfaction of all condition precedents to Closing, and the Closing of the Transactions.
6.12 Further Assurances
Each of the Sellers, from time to time after the Closing, at Purchasers' request, shall execute, acknowledge and deliver to Purchasers such other instruments of conveyance and transfer, and will take such other actions and execute and deliver such other documents, certifications and further assurances as Purchasers may reasonably request in order to vest more effectively in Purchasers, or to put Purchasers more fully in possession of the Interests and the Business.
6.13 No Solicitation of Employees or Agents
Commencing on the Effective Date and continuing until the Closing or, in the event the contemplated transaction is not closed,one (1) year following termination of this Agreement. no Party to this Agreement shall, directly or indirectly, solicit or advise an employee or agent of the other Party to terminate his employment or agency with the other Party, or solicit or employ said employee or agent to work in any capacity for that Party.
6.14 Obligations Post Closing
(a)
For three (3) years following Closing, none of the Sellers, including any of their respective directors, officers, employees and agents, will, directly or indirectly, on behalf of any other person or Entity, in any way or in any other capacity, solicit any customer of NBS, ISG or the .Business, including without limitation calling upon any such customer for the purpose of soliciting or providing to such customer any products or services which are the same as or similar to those provided or intended to be provided by Fusion or its affiliates.
(b)
As partial consideration for payment of the Purchase Price hereunder and as a material inducement to Purchasers to consummate the Transactions, Kaufman agrees to enter into a restrictive covenant agreement with Purchasers on terms that are mutually agreeable to Purchasers and Kaufman providing, for a period of three (3) years from Closing, he (i) will not engage in or conduct, directly or indirectly, In any capacity, any business activities that compete with the business of Fusion or its affiliates within those states In which the Business is conducted or in which Fusion or its affiliates currently or in the future have customers; and will not, directly or indirectly, deliver service in any such state; and (ii) will not solicit employees or agents of NBS, ISG, the Business or Fusion to leave the service of NBS, ISG, the Business or Fusion, as the case may be; and (iii) will not solicit customers of NBS, ISG, the Business or Fusion to divert their business away from, or to reduce their level of business with, NBS, ISG, the Business or Fusion.
6.15 Financing
The Parties understand and acknowledge that Purchasers' consummation of the Transactions is subject to and dependent upon ils ability to secure adequate financing to pay the Purchase Price under this Agreement and the NBS Purchase Agreement, and provide for reasonable working capital needs following the Closing, as determined by Purchasers, through debt and/or equity financing ("Necessary Funding"). Accordingly, Closing of the Transactions shall, at all times, be contingent upon Purchasers securing Necessary Funding; provided, however, that in the event Purchasers have not secured commitments for Necessary Funding
prior to the expiration of 60 days following the Audit Due Date, any Party may terminate this
Agreement.
6.16 Corporate Name and Domain Name
Sellers agree that from and after the Closing, neither ISG nor any of the Sellers shall (a) sell, transfer or assign the corporate name "Interconnect Systems Group II LLC," any derivation thereof, and/or the domain name or url "isgcom.com (collectively, the "ISG Names") to any third party or (b) use any of the ISG Names in connection with any business related to telecommunications and/or information technology.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by Sellers
(a)
From and after the Closing, each of the Sellers, jointly and severally, shall defend, reimburse, indemnify and hold harmless each of the Purchasers and its shareholder, directors, officers, employees and agents, (each such person being referred to as a "Seller Indemnifier Party") against and in respect of:
(i)
Any and all liabilities and obligations of any nature whatsoever, relating to ISG and/or the Business that accrue prior to the Closing and are not assumed by Purchasers in accordance with the terms of this Agreement.
(ii)
Any and all actions, suits, claims, or legal, administrative, arbitration, governmental or other proceedings or investigations against any Seller Indemnified Party, including but not limited to claims made by any regulatory agency (each a "Proceeding"), to the extent that any such Proceeding pertains to any occurrence, action, inaction or transaction occurring prior to the Closing Date.
(iii)
Any and all damages, losses, deftciencies, liabilities, costs and expenses incurred or suffered by any Seller Indemnified Party that result from, relate to or arise out of (A) any misrepresentation, breach of warranty or nonfulfillment of any agreement or covenant on the part of any of the Sellers under this Agreement or from any misrepresentation in or omission from any certificate, response to due diligence, schedule, statement, document or instrument furnished by any of the Sellers pursuant hereto or in connection with the negotiation, execution or performance of this Agreement or (B) the information set forth on Schedule 4.11(b) to the extent that such information pertains to any occurrence, action, inaction or transaction occurring prior to the Closing Date.
(iv)
Any claim by any former officer, employee, or creditor of the Business to the extent that any such claim pertains to any occurrence, action, inaction or transaction occurring prior to the Closing Date.
(v)
Any and all actions, suits, claims, proceedings, investigations, demands, assessments, audits, fines, judgments, costs and other expenses (including, without limitation, reasonable legal fees and expenses) incident to any of the foregoing or to the enforcement of this Section 7.1.
(vi)
Any and all matters for which indemnification is lo be provided by NBS or any other "Seller" under the NBS Purchase Agreement.
(b) Notice must be given within a reasonable time after discovery of any fact or bcircumstance on which a Seller Indemnified Party could claim indemnification ("Claim" or "Claims"). The notice shall describe the nature of the Claim, if the Claim is determinable, the amount of the Claim, or if not determinable, an estimate of the amount of the Claim. Each Seller Indemnified Party agrees to use its reasonable best efforts to minimize the amount of the loss or injury for which it is entitled to indemnification. The Sellers shall at all times have the primary obligation of defending any Claim and shall pay all costs and attorneys' fees associated therewith whether or not the action is brought directly against a Seller Indemnified Party. The Seller Indemnified Party shall have the right to select counsel to defend the Claim; provided that the identity of such counsel is acceptable to Sellers and Sellers do not unreasonably withhold their consent to such selection. Notwithstandfing the foregoing, each Seller Indemnified Party shall be entitled, at its cost and expense, to have counsel of its own choosing assume the defense of such Claim against lt.
(c)
No Claim for which indemnification is asserted shall be settled or compromised without the written consent of the Seller Indemnified Party, and such consent shall not be unreasonably withheld.
(d)
A Claim shall be deemed finally resolved in the event a matter is submitted to a court, upon the entry of judgment by a court of final uthority.
7.2 Payment of Indemnification Obligalion
Each of the Sellers, jointly and severally, agree to pay promptly to any Seller Indemnified Party, the amount of all damages, losses, deficiencies, liabilities, costs, expenses, claims and other obligations to which the foregoing indemnities relate, including reasonable attorneys' fees. Purchasers may setoff any of Sellers' indemnification obligations under this Agreement from any portion of the Purchase Price (not including the Members' Note) following a favorable final resolution per the dispute resolution procedure described in Section 7.1(d) and the terms of the escrow hold back described in Section 2.6. Notwithstanding the foregoing, Sellers shall not be obligated to pay indemnification to Purchasers under this Section until such time as the aggregate amount due hereunder, and under Section 7.2 of the NBS Purchase Agreement,is at least $100,000.00 (the "Basket"), whereupon the entire amount of indemnification, without regard for the Basket, shall be due and payable. The Sellers' indemnification obligations under this Agreement are not limited by the amount of the escrow Hold Back described in Section 2.6, above.
7.3 Other Rights and Remedies Not Affected
The indemnification rights of each Seller Indemnified Party under this Article VII are independent of and in addition to such rights and remedies as Fusion, Newco and the Seller Indemnified Party may have at law or in equity or otherwise for any misrepresentation, breach of warranty or failure to fulfill any agreement or covenant hereunder, including without limitation the right to seek specific performance, rescission or restitution, none of which rights or remedies shall be affected or diminished hereby.
7.4 Survival
Notwithstanding any right of any Party to investigate fully the affairs of the other Party, Purchasers have the right to rely fully upon the representations, warranties, covenants and agreements of Sellers in this Agreement or in any Schedule, Exhibit, certificate or financial statement delivered pursuant hereto except to the extent that Purchasers have actual knowledge to the contrary. All such representations, warranties, covenants and agreements by Sellars shall survive the execution and delivery hereof and the Closing hereunder and the Seller Indemnified Party shall be indemnified in accordance with this Article VII or other express provisions in this Agreement, and, except as otherwise specifically provided in this Agreement, the obligations shall thereafter terminate and expire at the end of the second (2nd} full year after the Closing Date unless a claim has been asserted prior to that date.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
The respective obligations of Purchasers (see Section 8.1) and Sellers (see Section 8.2) to consummate the Transactions are subject to the satisfaction at or prior to the Closing Date of eachof the following conditions:
8.1 Conditions Precedent to the Obligations of Purchasers
The obligation of Purchasers to consummate the Transactions is subject to the satisfaction at or prior to the Closing Date of each of the following conditions, unless waived by Purchasers in writing:
(a)
The representations and warranties of each of the Sellers contained in Section 4 shall be true and correct in all respects as of the date of this Agreement and on and as of the Closing Date, as though made on and as of the Closing Date. Each other representation and warranty of the Sellers contained in this Agreement shall, if specifically qualified by materiality, be true and correct and, if not so qualified, be true and correct in all material respects in each case as of the date of this Agreement and on and as of the Closing Date, as though made on and as of the Closing Date.
(b)
Each of the Sellers shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by each of them prior to or on the Closing Date.
(c)
Sellers shall have delivered to Fusion (i) a certifiCate, dated the Closing Date, signed on behalf of ISG by the Chief Executive Officer, and by each of the other Sellers by a duly authorized person, certifying as to the fulfillment of the conditions specified in Section 8.1, (ii) a certificate of the Manager(s) of ISG, dated the Closing Date, certifying as to (A) the good standing of ISG (with good standing certificate attached), (B) due authorization of this Agreement and the Transactions (witn resolutions attached),and (C) true and correct attached copies of the Articles of Organization of ISG, and (iii) a certificate of the Manager of ISG certifying, among other things the incumbency of all officers of ISG and Sellers and ISG and Sellers having authority to execute and deliver this Agreement and the agreements and documents contemplated hereby and the Transactions.
(d)
All Third Party Consents required under all Company Material Contracts or otherwise hereunder are obtained and copies thereof delivered to Purchasers.
(e)
Except as set forth on Schedule 8.1(e), on or before the Closing, Sellers shall have obtained a release and discharge of any and all liens (including Tax Liens), security interests, restrictions, defects and encumbrances which affect ISG or the Business, and shall provide Fusion with all UCC-3 forms where applicable.
(f)
There shall not have been any material statute, rule, regulation, order, judgment or decree proposed, enacted, promulgated, entered, issued, enforced or deemed applicable by any foreign or United States federal, state or local governmental Entity, and there shall be no action, suit or proceeding pending or threatened, which, in Fusion's reasonable judgment {i) makes or may make this Agreement or any of the Transactions illegal, or imposes or may impose malarial damages or penalties in connection therewith; (li) otherwise prohibits or unreasonably delays, or may prohibit or unreasonably delay Transactions; or (iii) increases in any material respect the liabilities or obligations of Purchasers arising out of this Agreement, or any of the Transactions.
(g)
Purchasers shall have made binding arrangements to complete its acquisition of the Interests of NBS pursuant to the NBS Purchase Agreement, contemporaneous with the Closing of the Transactions.
(h)
Purchasers shall not have terminated this Agreement under Section 6.7, above, based upon their due diligence review.
(i)
No party shall have terminated this Agreement under Section 6.15, above, due to the inability to secure Necessary Funding.
(j)
Kaufman shall have entered Into the Employment Agreement contemplated by
Section 6.5 hereto.
(k)
Purchasers shall not have terminated this Agreement under Section 6.8, above, due to the Audit.
(l)
There shall be no Excluded Liabilities which ISG, the Business or Purchasers remain liable to pay after the Closing.
(m)
All consents to contracts required in connection with the consummation of the
Transactions shall have been received and delivered to Fusion.
(n)
Since the date hereof, nothing shall have occurred, and Purchasers shall not have become aware of any circumstance, change or event having occurred prior to such date, which individually or in the aggregate, has had or, in the reasonable judgment of Purchasers, could be expected to have, a Business Material Adverse Effect or a MaterialAdverse Affect on (i) the Transactions or Purchaser's liabilities or obligations with respect to such Transactions; or (ii) the business or prospects of ISG, the Business or Fusion (including any potential change or event disclosed on any Schedule which, subsequent to the dale hereof, actually occurs).
(o)
All approvals and consents by any governmental Entity required in connection with the consummation of the Transactions shall have been obtained and shall be In full force and effect and delivered to Purchasers; aU filings with any governmental Entity, as are required
in connection with the consummation of such transactions, shall have been made; and all waiting periods. if any, applicable to the consummation of such transactions imposed by any governmental entity shall have expired.
(p)
All actions, proceedings. instruments and documents required to carry out the Transactions or incidental hereto and all other related legal matters shall have been reasonably satisfactory to and approved by counsel for Purchasers, and such counsel shall have been furnished with such certified copies of such corporate actions and proceedings and such other Instruments and documents as such counsel shall have reasonably requested.
8.2
Conditions Precedent to the Obligations of Sellers
The obligations of each of the Sellers to consummate the Transactions are also subject to the satisfaction at or prior to the Closing Date of each of the following conditions, unless waived by each of the Sellers:
(a) The representations and warranties of Purchasers contained herein shall be true and correct in all respects as of the date of this Agreement and on and as of the Closing Date. as though made on and as of the Closing Date. Each other representation and warranty of Purchasers contained in this Agreement shall, if specifically qualified by materiality, be true and correct and, if not so qualified,be true and correct in all material respects in each case as of the date of this Agreement and on and as of the Closing Date, as though made on and as of the Closing Date.
(b)
Each of the Purchasers shall have performed in all material respects all of their respective obligations and agreements,and complied in all material respects with all covenants and conditions. contained in this Agreement to be performed or complied with by Purchasers prior to or on the Closing Date.
(c)
Each of the Purchasers shall have delivered to Sellers a certificate, dated the Closing Date, signed on behalf of its Chief Executive Officer certifying as to the fulfillment of the conditions specified in this Section 8.2, including, among other things. the incumbency of each officer of Fusion and Newco having authority to execute and deliver this Agreement and the agreements and documents contemplated hereby and the Transactions.
(d)
All actions. proceedings, instruments and documents required to carry out the Transactions or incidental hereto and all other related legal matters shall have been reasonably satisfactory to and approved by counsel for Sellers, and such counsel shall have been furnished with such certified copies of such corporate actions and proceedings and such other instruments and documents as such counsel shall have reasonably requested.
(e) There shall not have been any material statute, rule, regulation, order, judgment or decree proposed,enacted, promulgated, entered, issued, enforced or deemed applicable by any foreign or United States federal, state or local Governmental Entity, and there shall be no action. suit or proceeding pending or threatened, which, in Sellers' reasonable judgment (i) makes or may make this Agreement or any of the Transactions illegal. or imposes or may impose material damages or penalties in connection therewith; (ii) otherwise prohibits or unreasonably delays, or may prohibit or unreasonably delay Transactions; or (iii) Increases in any material respect the liabilities or obligations of Sellers arising out of this Agreement, or any of the Transactions.
(f)
Since the date hereof, nothing shall have occurred, and Sellers shall not have become aware of any circumstance, change or event having occurred prior to such date, which individually or in the aggregate, has had or, in the reasonable judgment of Sellers, could be expected to have, a Fusion Material Adverse Effect or a Material Adverse Affect on the Transactions or Sellers' liabilities or obligations with respect to such Transactions.
ARTICLE IX
TERMINATION
9.1 Termination by Fusion
In the event any of the conditions contained in Section 8.1 are not fully and completely satisfied as of the Closing Date, and the conditions shall not have been expressly waived in writing by Purchasers, this Agreement shall terminate upon notice by Purchasers to Sellers. In addition, Purchasers shall have the right to terminate this Agreement (a) in the event of termination of the NBS Purchase Agreement and/or (b) as provided in Sections 6.7, 6.8 and
6.15, above.
9.2 Termination by Sellers
In the event any of the conditions contained in Section 8.2 are not fully and completely satisfied as of the Closing Date, and the conditions shall not have been expressly waived in writing by Sellers, this Agreement shall terminate upon notice by Sellers to Purchasers. In addition, Sellers shall have the right to terminate this Agreement (a) in the event of termination of the NBS Purchase Agreement and/or (b) as provided in Section 6.15, above.
9.3 Effect of Termination
In the event of termination of this Agreement pursuant to this Article 9, this Agreement, except as to the provisions of this Agreement which shall expressly survive any termination, shall become void and of no effect with no liability on the part of any party hereto; provided, however, except as otherwise provided herein, no such termination shall relieve any party hereto of any liability or damages resulting from any willful or intentional breach of this Agreement, including, without limitation, a Party's refusal to consummate the Transactions without legal justification.
ARTICLE X
MISCELLANEOUS
10.1 No Walver, Survival of Representations, Warranties, Covenants and Agreements
The respective representations and warranties of the Parties contained herein, or in any schedule or certificate or other instrument delivered pursuant hereto prior to or at the Closing, shall not be deemed waived or otherwise affected by any investigation made by any Party hereto or any knowledge of any Party for whose benefit such representations and warranties are made. The respective covenants and agreements of the Parties contained herein which are to be performed after the Closing shall survive the Closing Date and shall only terminate in accordance their respective terms.
10.2 Expenses
Each of the Parties shall bear its own costs and expenses associated with its completion of due diligence and the other activities contemplated by this Purchase Agreement; provided, however, that (a) Fusion and Sellers shall equally split and pay the expenses associated with the Audit, unless the Audit cannot be completed or the Audit indicates that the financial condition of the Company is materially different from that represented by Sellers, in which case the expenses of the Audit shall be paid entirely by Sellers; and (b) Fusion shall pay all costs associated with obtaining the regulatory approvals contemplated by Section 6.9 above. Except as aforesaid, expenses of ISG or the Business incurred as a part of this transaction shall not be considered incurred in the normal course of business and shall be discharged at or prior to Closing or shall cause a corresponding adjustment to the Purchase Price.
10.3 Remedy
Sellers acknowledge that the Business is unique and the Purchasers would experience significant difficulty in identifying and acquiring a similar business which to acquire. Accordingly, in addition to any other remedy available to Purchasers, each of the Sellers agrees that Purchasers may invoke any equitable remedy to enforce performance hereunder, including, without limitation, the remedy of specific performance.
10.4
Notices
(a) All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally (by courier service or otherwise), or mailed (certified or registered mail with postage prepaid and return receipt requested), or sent by confirmed facsimile, as follows:
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Notice to Purchasers:
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Fusion Tele Communications International, Inc.
Attn.: President
420 Lexington Avenue, Suite 1718
Facsimile No.: (212} 972-7884
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Notice to ISG:
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Interconnect Systems Group II, LLC
Attn.: Jon Kaufman
155 Willowbrook Boulevard, 2nd Floor
Facsimile No.: (973) 638-2199
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Notice to Sellers (other
than ISG):
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Jonathan Kaufman
155 Willowbrook Boulevard, 2nd Floor
Facsimile No.: (973) 638-2199
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(b) Notwithstanding the foregoing, notices to Sellers and Purchase may be contained in a single notice to all of them, respectively.
(c) Any such notice shall be deemed to have been given (i) upon actual delivery, if delivered by hand; (ii) on the following business day, if delivered by same-day or overnight courier service; (iii) on the third (3rd) business day following the mailing of such notice by certified or registered mail; and (iv) upon sending such notice, if sent via facsimile with transmission receipt confirmation.
10.5 Entire Agreement
This Agreement (including the Schedules and Exhibits and other documents referred to herein) constitutes the entire agreement between the parties with regard to the subject matter hereof, and supersedes all prior agreements and understandings, oral and written, between the parties with respect to the subject matter hereof.
10.6 Assignment; Binding Effect: Benefit
Neither this Agreement nor any of the rights, benefits, or obligations hereunder may be assigned by any Party (whether by operation of law or otherwise) without the prior written consent of the other Party. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective successors and assigns.
10.7 Amendment
This Agreement may not be amended except by an instrument in writing signed by or on behalf of each of the Parties hereto.
10.8 Headings
The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
10.9 Counterparts; Facsimile/Email Signatures
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. This Agreement may be executed and delivered by facsimile or email signature.
10.10 Governing Law and Venue
To the extent that the General Corporation Law of the State of Delaware (the "DGCL") purports to apply to this Agreement, the DGCL shall apply. In all other cases, this
Agreement And
any and all matters arising directly or indirectly here from shall be governed by and construed and enforced in accordance with the internal laws of the State of New York applicable to agreements made and to be performed entirely in such state, without giving effect to the conflict or choice of law principles thereof. For all matters arising directly or indirectly from this Agreement ("Agreement Matters"), each of the parties hereto hereby (a) irrevocably consents and submits to the sole exclusive jurisdiction of the United States District Court for the Southern District of New York and any state court in the State of New York that is located in New York County (and of the appropriate appellate courts from any of the foregoing) in connection with any legal action, lawsuit, arbitration, mediation, or other legal or quasi legal proceeding ("Proceeding") directly or indirectly arising out of or relating to any Agreement Matter; provided that a party to this Agreement shall be entitled to enforce an order or judgment of any such court in any United States or foreign court having jurisdiction over the other party, (b) irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such Proceeding in any such court or that any such Proceeding which Is brought in any such court has been brought in an inconvenient forum, (c) waives, to the fullest extent permitted by law, any immunity from jurisdiction of any such court or from any legal process therein, (d) irrevocably waives, to the fullest extent permitted by law, any right to a trial by jury in connection with a Proceeding,(e) agrees not to commence any Proceeding other than In such courts, and (f) agrees that service of any summons, complaint, notice or other process relating to such Proceeding may be effected in the manner provided for the giving of notice as set forth in herein.
10.11 Joint Participation In Drafting this Agreement
The parties acknowledge and confirm that each of their respective attorneys have participated jointly in the drafting, review and revision of this Agreement and that it has not been written solely by counsel for one party and that each party has had the benefit of Its independent legal counsel's advice with respect to the terms and provisions hereof and its rights and obligations hereunder. Each party hereto, therefore, stipulates and agrees that the rule of construction to the effect that any ambiguities are to be or may be resolved against the drafting party shall not be employed in the interpretation of this Agreement lo favor any party against another and that no party shall have the benefit of any legal presumption or the detriment of any burden of proof by reason of any ambiguity or uncertain meaning contained In this Agreement.
10.12 Severability
The provisions of this Agreement shall be deemed severable and the Invalidity or un enforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.
10.13 Enforcement
The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement initially in accordance with the provisions of Section
10.10 above, but to the extent that the courts of exclusive jurisdiction cannot issue an effective
order of injunction or specific enforcement, then in any court of competent jurisdiction. The provisions of this Section shall be in addition to any other remedy to which they are entitled at law or in equity.
10.14 Attorneys' Fees and Costs
Unless expressly set forth in the Agreement, if any action or other proceeding is brought for the enforcement or interpretation of this Agreement, or because of any alleged dispute, breach or default in connection with any of the provisions of this Agreement, the successful or prevailing Party shall be entitled to recover reasonable attorneys' fees and other costs incurred in that action or proceeding (including, without limitation, reasonable attorneys' fees and costs
incurred in all appellate proceedings), in addition to any other relief to which it may be entitled.
10.15 Delays and Omissions
No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or In any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.
10. 16 Representation by Counsel
Each Party represents and warrants to the other that it has consulted with and has been represented by the attorney and accountant of its choosing with reference to this Agreement and the transactions contemplated herein.
IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the date first above written.
SCHEDULE A
MEMBERSHIP INTERESTS
Name and Address of Member
|
Percentage Ownership of interests
|
JK Trust
|
90%
|
LKII Trust
|
10%
|
TOTAL
|
100%
|
Schedule 2.2(c)(I)
All furniture and equipment located in the leased premises at 155 Willowbrook Blvd. used in the daily operation of the business.
2- 2011 Ford Transit Trucks
1- 2011 Hyundai Genesis driven by Russell Markman
Schedule 2.2(c) (ll)
All CPE owned by NBS located on customer locations and in inventory.
Redback Networks Switch gear
|
Super Micro Server
|
Fortinet Firewall
|
Cisco Firewall
|
Coco AS 5400 Media gateway OSJ
|
FUSE PANEL
|
Cisco PGW software & Sun Box
|
CHASSIS
|
Cisco TOW software
|
Tripplite Power strips
|
HP Proliant Server
|
APC Reboot Switches
|
Locked cabinets for Colo
|
Adtran
|
Locked Colo Cabinets
|
MRA Fiber to Ethernet Converter
|
Juniper Router
|
Omnltron Friber to Eth Converter
|
Cisco Switch
|
Power Work PDU
|
Cisco Switch
|
Packet Voice Processor
|
AS5400HPX
|
Switch Gear
|
IBM Server
|
Switch Gear
|
AS 5300
|
Switch Gear
|
Cisco Switch
|
Deal How Networks - mid-Band Ethernet Edg; Telect - Interface Panels RJ48C
|
HP Proliant Blade Server
|
ProVantage Upstation GXT2 2000VA RM 2U/PDU120V
|
SunT-2000
|
Qualitek – Red back - Smartedge 800 routers
|
SunT-2000
|
Modern Enterprise - Cisco AS400 HPX/CT3.S48
|
Fortin et Firewall
|
Ingram Micro • 1200R12TB SATA STOR SYSTEM
|
Fortinet Fortilog
|
Ingram Micro • Smart Buy 01360 GS E5420 2.5g,
|
Extreme Switch
|
Astreya - Universal Port Cards/Power Supply
|
Fortinel Firewall
|
Diversitech
|
Redback Smartedge BOO
|
Ingram Micro - 1200R 12TB SATA STOR SYSTEM
|
Fortinet Firewall
|
Tech Data DL320 G5P 3360 x/2 .38 2gfa DVD SBY
|
Crash Cart Moveable KVM/CPU
|
NW Remarketing Red back OIM SEB L31CHOC12 SM
|
Crash Cart Moveable KVM/CPU
|
Ingram Micro Proliant OL360G5 Server, 8gb memory, 72gb HO, 20" Monitor
|
Quantum Tape Backup
|
Ingram Micro 600VA Standby UPS / SAS 300 Int HO 14
|
extreme switches
|
Titan Telecom Smartedge BOO Router L
|
HP Proliant Server
|
4 port GE Carrier Edge card plus accessories (Astreya)
|
DC to AC Inverter NEBS Xantrex Data com
|
Ingram Micro Upstation
|
HP Proliant Server
|
Ingram Micro Upstation
|
Super Micro Server
|
Insight 2u P.K mnt Pwr Dist 20120v-20amp NEMA
|
Super Micro Server
|
Insight Raritan Dominion PX 0PXR2O-3OL Power Control unit 3600VA
|
HP Proliant Server
|
Insight HP NC510C PCIe 10 Gigabit Server Adapter-network adapter
|
Equipment Cabinets
|
Verizon Business Co-location Mgr Application
|
HP Procurve Switch
|
Presidio Cross connect modules/timing comm Control & other Switch Equip
|
Adtran
|
Redback Networks XCR3 SE8 UPG
|
Super Micro Server
|
PIX 535 UR bundle, PIX 66mhz gig ethernet card
|
HP Proliant Server
|
MX2B20 2SH future bus to 64 PIN MALE AMP
|
Cisco Router
|
Redback Networks Gigabit Ethernet ASM SE8GBICTX(2],SX(4),LX(4)
|
Adtran MX2820 ds3 w/patch panel
|
Ingram Micro 8gb Kit for 60 Hudson
|
Alt u scan
|
Redback Networks Gigabit Ethernet ASM SE8GBICTX(4)>SX(12),LX[1)
|
AC to DC 1 U compilers
|
Titan Telecom SE3 L3 4Gig Ethernet
|
2651XM SLT
|
Presidio
|
HP 17" folding monitor
|
Various hardware, components purchased via AM EX (
|
HP Proliant Blade Chassis
|
Olympic Wire & Cable - Assemblies, Hubbell, CATSE
|
Cisco 7651XM SLT
|
Ingram Micro - HP Compaq Server/B3 DU85G5 Kit - VoIP Platform
|
PATCH PANEL
|
insight - Raritan Dominion PX DPX A20-3OL power control unit 3600 VA
|
APC Power Strip
|
Insight - HP Storage Works FC2243 network adapter 2 ports
|
Tripp Lite -PDU's
|
Astreya - Cisco Optical Equipment
|
Tripp Lite -PDU's
|
Ingram Micro 12 MUX Card/MX2820, MX2820 Systems Controller, Chassis
|
Fortinet Fire will
|
Ingram Micro 4 -4gb kit 2x2gb low power kit HP Compaq server
|
Adtran
|
Ingram Micro 1 - MX2820sCU Plug in Card IP
|
ATM to channelized DS# converter
|
Tech Data
|
Foundry Networks
|
Millenium Communicating group 24 port Rack mount termination panels
|
ATEN KVM Monitor
|
Redback Networks Cable Meters RJ
|
Advantech E911 Boc
|
UNI Power KVA Inverter
|
NexGate Server
|
Presidio DS3 Transmux 12 CKT
|
Ac to DC power inveter
|
3U Super micro HBDAE 2x Opteron
|
DS3 MODULE
|
Sun Fire x4540 3rd Generation Sun Storage Teck Enterprise Host Bus adapters
|
Red Rack Linux
|
HP DL370 G6 It OC 2.53ghz 8gb Server with power supply (16S Halsey]
|
Supcr Mlcro Server
|
Redback XCR3-SE8-13/EIM2-SE8-L3-4GE/EIM-SEB-L3-4GE
|
Schedule 2.2(c)(lll)
IMAGING SPECTRUM STATIONARY (AMEX)
|
INSIGHT - HP PROLIANT (1) / HARD DRIVE (2)
|
ASTREYA CISCO 3825 W/AC PWR, 26 E, 1SFP, 2NME, IP BASE.
|
|
ASTREYA VWIC2-2MFT-T1/C1 2 PORT MULTIPLEX TRUNCK
|
VOIP EQUIP - NBS INFRASTRUCTURE
|
ABP TECHNOLOGY COMPUTER DATA PROCESSOR (AMEX)
|
Ingrain micro 303306111
|
INSIGHT 4 DX5150 MT
|
Dell
XCDTN9ROS
|
TECH DATA AV3270 512MB 60GB
|
Insight 900449493
|
INSIGHT NX6115 & UPGRADE
|
|
INGRAM 3 17" VGA LCD
|
Netxusa inc
|
INSIGHT NMAC MINI 1.5 SOLO
|
Ricoh inv #25344
|
WALKER & ASSOC. SECURE IP GATEWAY SYS
|
Ricoh inv *25344a
|
INGRAM MX 2800 REDUNDANT M13 MUX AC
|
Ingram micro 30-5477011
|
WALKER & ASSOC.2 SECURE IP GATEWAY SYS
|
Ingram micro 30-6499611
|
INSIGHT PROLIANT DL320
|
Exinda networks 00004629
|
INGRAM 2 SMART UPS 3000VA
|
Network hardware resale 202056
|
IP TECHNOLOGY 2 DELL NOTEBOOKS
|
|
INGRAM MICRO LASERJET 4250TN 45PPM 1200DPI
|
Ricoh 25344b
|
INSIGHT S-BUY HP DL330G4 X3.0 2G RPS
|
It turbo corp 070308
|
INSIGHTS BUY HP DL38064 X3.0 2G RPS
|
WRCA.NET - 08o26so626
|
INSIGHT PROLIANT DL320R04 C2.93/533-2
|
WRCA.NET - 0802800707
|
INGRAM MICRO SMARTSUP 3000VA RM 2U120V
|
Astreya inc-inv 51244
|
INGRAM MICRO QUICKBERT – T1 TEST SET KIT
|
WRCA.NET - 0802980725
|
INSIGHT DXS1S0 MT A64/3000 256MB-40 GB
|
AMEX- 072808
|
INSIGHT DX220OMT PA 2.66 256MB 40GB
|
HSBC Business solutions 012608
|
INSIGHT 3RES SR1720NX MT A64-3S001GB
|
Astreya inc - inv 51384
|
INSIGHT HP 17" DISPLAY
|
Modern enterprise solutions 4264
|
INSIGHT 3 A60 3800A
|
WRCA.NET - 073108
|
VOIP EQUIP 32 AOA
|
Insight 900780581
|
VOIP EQUIP ISG
|
WRCA.NET - 0803640908
|
VOIP EQUIP OCTAGON
|
Insight 900914082
|
NOMADIC DAVINCI BOOTH
|
Verzon - collo app
|
INGRAM MICRO- SMART BUY 17IN LCD (5)
|
Teraquant corp 6022s48
|
INSIGHT - HP RFF DXS150 XPP (4)
|
WRCA.NET - 0804371021
|
TECH DATA - NX7300CD (1) / USB (6)
|
AMEX-112708
|
INSIGHT - LENOVO 3000 DESKTOP (2)
|
Astreya inc-inv s2221
|
INGRAM MICRO - 17IN (CD CAP TOUCH {1}
|
As trey a inc - inv 52056 mx2820 mux card, 6 port ds3 modules. Dual odc chassi
|
INGRAM MICRO - LASERJET PRINTER (1)
|
Astreya inc - inv 52080 mx2b20 73" chassis, mx2820 mux card, 15454 sa hd ne
|
AMEX - DELL - PROCESSORS (4) - NBS
|
Astreya inc - inv s2152 asx200 bx with atm ima card
|
INSIGHT - COMPAQ NOTEBOOK (1)
|
HSBC Business solutions 112708
|
INSIGHT-COMPUTER
|
Diversitec llo121508 clfc
|
INSIGHT - HP PROLIANT HARD DRIVE (2)
|
Qualitek-clec upgrade
|
|
Focused technology - projector and screen for solutions room
|
Schedule 2.2(c)(iv)
Blank
Schedule 2.2(c)(v)
Blank
Schedule 2.2(c)(vi)
Blank
Schedule 2.2(c)(viii)
Blank
Schedule 2.2(c)(ix)
Blank
Schedule 2.2(c)(x)
VMware (software)
Acme Packet (hardware and software)
Nexenta (storage software)
Axacore (fax server software)
Cisco (equipment)
Vertex tax software
Dun and Bradstreet credit evaluation
05 TOYOTA PRIUS
06 CHEVROLET SILVERADO
07 JEEP Compass
2009 Jeep Wrangler
2012 Dodge Charger
2011 GMC Yukon
2011 Ford Raptor
Schedule 2.3(c)
Billy Sanders
|
$
5,000.00
|
|
Robert Darrah
|
$
122,233.41
|
|
Schedule 2.3(e)
A/R- MANCHESTER REALTY LLC
|
$685
,705
|
|
A/R- CHESTNEY REALTY LLC
|
$
559,485
|
|
LOAN REC STCKHOLDER
|
$
343,609
|
|
ACCOUNTS RECEIVABLE - HORIZON HOLDINGS
|
$
6,119
|
|
ACCOUNTS RECEIVABLE - LNS
|
$
59,469
|
|
ACCOUNTS RECEIVABLE - LK TRUST
|
$
3,242
|
|
ACCOUNTS RECEIVABLE - JK TRUST
|
$
6,288
|
|
Schedule 2.4(b)
Offfce lease
: Month-to-month lease for space at 155 Willowbrook Blvd. Wayne NJ 07470 current monthly cost is $9,973.62.
Insurance costs covering office, co-lo spaces, and vehicles
Equipment leases:
Financing Company
|
Description
|
Monthly Amount
|
Lease Expiration Date
|
Bank of America
|
Ethernet Router and computer hardware
|
$1,104,81
|
7/8/2013
|
CIT Financing
|
Ethernet Router and computer hardware
|
$679,45
|
7/8/2013
|
CIT Finencing
|
Computer Racks & Servers
|
$197.00
|
7/8/2003
|
Car Financing:
2011 Hyundai Genesis $925.82 monthly last payment due 2/15
Verizon Wireless contract covering cell phones for certain employees
Schedule 2.4(c)
Blank
Schedule 4.5
Blank
Schedule 4.9
Blank
Schedule 4.10
Blank
Schedule 4.11(b)
Blank
Schedule 4.16
Blank
Schedule 4.17
List Name
|
First Name
|
2011 Annual Comp
|
|
Alkhasyan
|
Arthur
|
62,424.30
|
|
Allen
|
Gio
|
61,770.00
|
|
Arko
|
Jamie
|
60,000,00
|
Plus sales based commissions
|
Asludillo
|
Wendy
|
92.095.54
|
|
Balia
|
Stephen
|
100,000.00
|
|
Belhumer
|
Ken
|
62,000.00
|
|
Bereznlker
|
Sergey
|
124,490.79
|
|
Borrero
|
Nina
|
35,500.00
|
|
Bruno
|
David
|
87.411.96
|
|
Campanello
|
Toni
|
93,182.13
|
|
Carrafiello
|
Ralph
|
125,000.00
|
|
Cervonl
|
Megan
|
37,000.00
|
|
Clay
|
Ana
|
50.135.23
|
|
Corazza
|
John
|
42,515.20
|
|
Corcoran
|
Sean
|
62,431.98
|
|
Darrah
|
Bob
|
95,403.00
|
|
Dolce
|
Kimberly
|
51,611.00
|
|
Ellas
|
Steven
|
32.585.00
|
|
Fallon
|
Daniel
|
63,159.54
|
|
Fusco
|
Judy
|
28,531.52
|
|
Garcia
|
Joel
|
72,500.00
|
|
George
|
Brian
|
144,672.68
|
|
Gillespie
|
Doug
|
164,800.00
|
|
Hampton
|
George
|
135,000.06
|
plus $15,000 quarterly sales bonus and commission
|
Haven
|
Gerard
|
48,046.26
|
|
Hawkes
|
Jeremy
|
70,000.00
|
|
Horn
|
Michael
|
85,000.00
|
|
Hoyt
|
Helen
|
49,056.00
|
|
Khan
|
Bilal
|
61,650.00
|
|
Laskowski
|
Larry
|
167,935.04
|
|
Lecaros
|
Rita
|
54,075.08
|
|
Lee
|
Carren
|
38,000.00
|
|
Markman
|
Russell
|
200,000.00
|
Use of company car, gas, tolls
|
Marston
|
Bradley
|
87,731.43
|
|
McCarthy
|
Rosanne
|
35,000.00
|
|
Miragliotta
|
Lee
|
73,328.50
|
|
Molnar
|
Laura
|
34,667.33
|
|
Pechenezshsky
|
Vevgeny
|
68.081.19
|
|
Perez
|
Juan
|
41,000.00
|
|
Piehler
|
Curtis
|
50,400.00
|
|
Pizzimenti
|
Joseph
|
58,495.77
|
|
Pose
|
Rosario
|
94,006.03
|
|
Roden
|
Sean
|
52,500.00
|
|
Salerno
|
Mike
|
68,413.00
|
|
Sanders
|
Billy
|
80,000.00
|
|
Savitskly
|
Victor
|
86,870.00
|
|
Sidener
|
Philip
|
45,867.28
|
Plus $390 per month for remote office expenses
|
Smith
|
Stephen
|
52,787.50
|
|
Straub
|
Janet
|
34,360.00
|
|
Suarez
|
Esther
|
56.411.54
|
|
Taylor
|
Steve
|
65,000.00
|
|
Thumann
|
Christopher
|
95,400.00
|
|
Torres
|
Jessica
|
42,014.70
|
|
Tressito
|
Bryan
|
49,056.00
|
|
White
|
Darreli
|
38,836.00
|
|
Wood
|
Ray
|
86,520.00
|
|
Zimmerll
|
Peter
|
105,490.84
|
|
Schedule 4.19
Horizon Blue Cross Shield; ISG contributes a portion of the insurance premiums, employees contribute the balance.
|
401k – employee only contributions, managed by Mutual of Omaha.
|
Section 125 Flexible Spending Accounts (FSA) – employee only contributions for unreimbursed medical benefits.
|
Certain employees receive cell phones and some expenses.
|
Blank
Blank
Blank
No Approvals or Notices Required; No Conflict with Instruments
The approval of such state and federal telecommunications regulatory authorities as may be required to permit the acquisition of the assets of ISG.
Legal Proceedings
Scott Needleman, Dorit z. Needleman, and Efraim Wasserman v. Chaim Tornhelm, Christos Valkanos, Yisrael M.Tornheim, Nathaniel Turbiner, Rayito, Inc., Yossl Alaev; and Fusion Telecommunications
International, Inc.
New York State Court, County of Kings (Index No. 24255/09)
On June 14,2010,three individuals filed an action against a former customer of Fusion and other associated persons,and against Fusion.The plaintiffs alleged that the non-Fusion defendants accepted funds from the plaintiffs for investment in real estate,but subsequently used some or all of those funds for other purposes.The plaintiffs further alleged that the non-Fusion defendants made certain payments to Fusion and they seek repayment of those sums in the amount of $237,913 plus interest. Fusion believes that the plaintiffs' claims are without merit as the bank account information provided by the plaintiffs themselves shows that the majority of the funds allegedly paid to Fusion were actually paid to other non-affiliated entities. Moreover,those funds that were received by Fusion were payment for specific telecommunications equipment and services purchased by the non-Fusion defendants, and Fusion had no knowledge of any alleged misuse of funds by the non-Fusion defendants.
Schedule 8.1(e)
Blank
Page 68